I want to invest in shares. Do I need a stockbroker?
If you want advice and someone working alongside you who knows your overall situation, attitude to risk and so forth then a professional stock broker - rather than reading an article in the press or on the web - should be high on your list.
As a finacial adviser i would however question whether you might not be better off investing via a professional fund management group to obtian a more diverisfied and regularly reviewed 'portfolio'.
Stock specific advice is the realm of licensed stock brokers. Financial advisers like myself advise on collective or 'packaged' investments. The argument for collective investing is that if you wish to buy a sufficiently diversified portfolio of stocks then you need at least ten such holdings. Also to be meaningful you need at least ten different stocks - and not all gathered from the same sector of the market like pharmaceuticals, telecoms or banks.
A 'meaningful holding' is deemed to be at least £10,000 worth as even doubling your money on £5,000 will 'only' generate £5,000 before taxes. This is certainly not enough to retire. Then there is the risk that you are analysing and selecting the stocks yourself and won't have the research resources available to you which larger organisations do. This applies not just to buying but to trying to identify the best time to sell.
Concentrating all your money in one or two stocks is higher risk than investing in a wider spread of ten or more holdings. Such a concentrated strategy may of course provide added rewards - or it may dig you deeper in losses if those you select disappoint!
These arguments explain why most people choose to invest by pooling their money together with lots of others in the charge of a professional fund manager and his or her team. The professionals then select in the order of forty or more underlying companies in which to invest the pooled funds. Importantly they then watch, monitor and adjust underlying stocks as required. Sure this extra tier of fund management brings an added cost which you will not face if you buy a mix of stocks directly yourself - but then you do not need to know nearly so much about what is going on, worry about being well diversified or having to do the legwork yourself.
There are plenty of establisehd funds ot chooose from whether you are seeking growth for the longer term (ten years plus), Income Now - or a combination of the two.
Funds concentrate in sectors like finance or environmental matters, they concentrate in regions like Europe, China or America or they are more generalist either UK top 250 companies, global or 'go anywhere' Strategic corporate bond funds. There will be something there for you without having to analyse, buy, monitor and deal with dividends, scrip issues, right issues and so forth.
| 11.05.12 @ 11:17