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Monday, February 22, 2010

Neither a buyer nor a seller be

Cast thy bread upon the waters

After having had a look at my share account on etrade I've got several bones to pick with my own self for getting involved with an online service. It's not that my account has done badly; in fact, my punt on beer and the rise of alcoholism post-crunch has paid off handsomely.

What does disturb me is that it costs just so much to make a trade. Given the proportion of money-to-fee that I have the online site, it means that any sale I make will result in my paying far more in fees than I will have made up in profits.

The resolution to this is, of course, to invest more into the site. But that is going to prove to be a false economy: the UK version of the site is moving across to Waterhouse, whose fees are even higher than those I am paying on eTrade. The higher the amount that is in there, the more likely it is that I will have to shell out a higher transfer fee if I don't want to go with Waterhouse.

So if I wait, I will get stung in the transfer; if I transfer now to a different provider, I get stung for commensurate fees and if I sell, any profit I made on the back of the depressed drunks of the UK will be evaporated.

What remains for me is to grin and bear the loss and sell out now. I may be able to get a paltry double-digit return back after all the fees.

Which brings me to my main point: even if you think you know how to trade, don't unless you really do have a lot of money to invest in stocks and shares and can absorb any trading fees; b) you have the time to trade frequently - more than 5 times a month - and therefore will benefit from lower transactional fees.

Otherwise, you might as well write it off as a good idea at the time.

harrumph! The good book says to cast your bread upon the waters and in seven days it shall return unto thee. I don't think it was referring to online share dealing sites as far as skinflints like the mermaid are concerned.

9 comments:

Gorilla Bananas said...

How much are you paying, Mermaid? It shouldn't be more than £10 to buy or sell (plus 0.5% stamp duty when you buy).

Fat Sparrow said...

I thought everybody else gave it up as a bad game and went to play Farmville on Facebook. At least Zynga's honest about being after your money and your soul.

"The good book says to cast your bread upon the waters and in seven days it shall return unto thee."

You get it back as duck poop. It's in the fine print, at the back. They skip that bit in church.

El-Kevo said...

What can I say, Mermins ?

You seem to have had a tough time of it all round lately. I can't quite get my head around it.

God bless.

(The athiest's lexicon is found wanting at such times so once in a while I have to pinch from the Christians. xxx)

Mermaid of Moorgate said...

Dear GB - it's more like £11.50. Actually, it is exactly £11.50. Which is far more than the price of beer in the Greene King pubs, whose shares I purchased.

Still, perhaps I should have thought twice before deciding to benefit at the expense of people's moral and physical health

Mermaid of Moorgate said...

Fat Sparrow - it is such a delight to have you back in the blogosphere! I missed your tales (and tails) greatly in your prolonged absence!

Even though you talk about duck poo...

:)

Mermaid of Moorgate said...

EK,

Thanks for your kind thoughts. Yeah, I think many times in life we have to go through prolonged valleys before we come out on the other side. I'm sure a brighter day is dawning for me on t'other side of the valley! If not it's probably a big welshman. Either way, that's still a bonus.

Gorilla Bananas said...

Slightly expensive but not too bad. You need to have at least 10k to make direct investment in shares cost effective. I don't need to teach a Mermaid of your financial knowledge about the indirect methods for smaller sums.

Mermaid of Moorgate said...

Aye, my good GB, and there's the rub.

I do not have £10k.

HOWEVER - great news! my friend's friend's dad has just set up a sharedealing site, where the maximum trade price is £8 AND he has said he will transfer me FOR FREE!

Coinciding with pay day as this does, I will be able to invest a little more each month into the site and maybe I will be able to make £10k and possibly lose as much within the next 3-5 years!!

YAAAY!!! (To the earning, not to the burning)

Gorilla Bananas said...

Yipee-yi-yay, Mermaid. Another way of cutting dealing costs is not to trade too often.

"A great company at a fair price is better than a fair company at a great price". WB