I want to invest c.£1k in specific shares listed on the NYSE. Any advice on how to go about that?
29 July 2021
Question by Malti
I have an ISA through Wealthify, but that’s the extent of my investing experience. I’ve never bought shares before in the U.K. let alone abroad. I want to invest about £1k in specific shares listed on the NYSE (merger between 2 cos which sell products I love due to complete in about a month). Any advice on how to go about that, and the most tax/cost efficient way? Thanks!
Answered by Boring Money
Given your lack of investment knowledge and experience, I would not suggest for you to invest directly in the US stock market this would be classed as a high-risk investment. By having your investment in one asset class and one specific fund, all your eggs are in one basket and your investment lacks diversification. If the company you invest in goes under, then the money within that fund could be lost as a result. Is this money you are happy to take a gamble with and potentially lose?
Diversification is the practice of spreading your investments around so that your exposure to any one type of asset is limited. This practice is designed to help reduce the volatility of your portfolio over time.
As you are familiar with Wealthify where you select your portfolio based on the level of risk you are willing to take and they provide details of the likely losses and gains of each portfolio over ten years. They have set up the portfolios to be diversified within a range of asset classes with different companies to try and achieve capital growth with lower risk.
There are four main asset classes:
Equities – these are shares in publicly held companies and are the most volatile in the short term however when held over long term they have outperformed the other investment classes.
Property – provides returns in the form of rent from the property and capital can increase with the value of property. Is not usually impacted by the falls in the financial market and may act as a buffer if there is a stock market crash.
Fixed interest – such as government bonds and corporate bonds. Pay a set rate of interest at specific times and return the investors capital, these are not as volatile as equities and provide a secure return.
Cash – cash is a safe investment however it carries its own risks as interest rates are at an all time low and therefore funds held in cash are likely to suffer from inflation risk.
If you still wish to proceed with the investment there are a number of platforms online that you can use to purchase direct shares. Another option would be to deal with a stockbroker who can arrange this on your behalf, however there would be additional costs for this. There are also additional taxes levied on non US investors that would also need to be considered.
Without knowing full details of the fund you wish to invest in I am afraid that I cannot provide specific information.
By necessity, this briefing can only provide a short overview and it is essential to seek professional financial advice before applying the contents of this article. This briefing does not constitute advice or a recommendation.