Money Watch – Personal Finance Blog

I don’t generally talk about or even spend much time thinking about buying and selling individual shares for a couple of reasons.

Firstly, because I believe you should get the rest of your finances (debt, savings) in order before worrying about individual equities – and even then, there are less risky ways of investing in the stock market (funds). Secondly, as I haven’t done much share dealing myself, I don’t know very much about it.

That said, if you’re a novice investor looking for a cheap route into shares, then a service such as the Interactive Investor Portfolio Builder might be for you. Their service is currently offering free share deals until the end of June, plus after that it’s just £1.50 per trade.

If you compare this charge to other brokerages, you’ll realise it’s a very low cost way of dealing, but the catch is that you have to choose which day of the month you wish to invest in, from a choice of four. (The reason the deals are so cheap is because of bulk trades on these four days lowering commission costs, which they pass on).

I actually think it’s a good way for novice investors to invest – it gets them thinking more about the time the investment has to grow, rather than the timing of the investment. Because you’re only able to specify 1 of four days in the month, there’s no way you can try to “time” the investment for a lower price.

With all investments, charges eat into performance, but because the charges here are lower, your investment doesn’t have to perform quite so well in order to start making you money.

Finally, the minimum investment is £20, meaning that you don’t have to risk a lot of money from day one, and you can invest in lump sums or monthly.

So, although you should probably make sure the rest of your finances are in order before dabbling in stocks and shares, this service is good if you want to dip your toe in and start a share portfolio.

(By the way, this might look like a blatant plug for Interactive Investor – I guess it is, but it has not been paid for – I just received an email from them selling the service, and I thought it would be a good thing to mention for beginner investors. If I ever do paid reviews, there will be full disclosure).