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d712
Stranger
Joined: 20 Feb 2006
Posts: 1
Cash Points ££ 15.00
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 Posted: Mon Feb 20, 2006 7:54 pm Post subject: A question (from a beginner) about maintaining a portfolio |
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In various books Jim Slater has listed several methods for selecting shares meeting specific criteria that have performed extremely well over a number of years.
The portfolio that interested me the most involved 5 of UK’s largest companies.
Slater outlines the criteria for selecting the shares. After a year the situation is reviewed and if there are different shares that meet the criteria then these would need to replace the original shares.
This portfolio has performed very impressively and produced an average return of 20% every year from 1984 to 1998. An initial £1000 investment would be worth
- over £17000 after 15 years
- nearly £300000 after 30 years
- and a whopping £5.1 million after 45 years.
Obviously the chances of this type of return are unlikely but it is nevertheless an attractive idea.
However the one question I have is to do with the yearly replacement of shares. I briefly looked into this several months ago and it seemed that most share dealers will charge you a flat fee (from my research at least £12) for each transaction.
If I were to invest £2000 in buying shares this way with £400 invested in each of the 5 companies I would have to pay fees of £60 or more. Then at the end of the year (if all 5 shares no longer met the criteria) I would have to pay additional fees to sell the shares (another £60) and to buy new shares (another £60)
Is there anyway of avoiding this because it seems that a large proportion of the profits will be eaten up in annual fees.
I suppose one solution would be to make larger investment as the fees are fixed but that my take beyond the amount I am willing to put on the line.
Are the figures I quoted for the fees reasonable or are there better deals out there than that?
Any suggestions would be greatly appreciated.
Many thanks |
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cashman
Beginning Saver
Joined: 01 Oct 2004
Posts: 49
Cash Points ££ 140.00
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| Posted: Tue Feb 21, 2006 2:19 am Post subject: |
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| I know the halifax sharebuilder allows you to build up a portfolio cheaply so may that is the answer to your excessive dealing costs ? |
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