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Sit back and wait for shares to deliver

Tony Lyons
Saturday 13 November 1999 19:02 EST
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The stock market is a volatile place, with share prices fluctuating on fears of rises in interest rates. And there is plenty of nervousness about the possible impact of the millennium bug on economic life, writes Tony Lyons.

So is now a good time to be contemplating buying equities, especially if you are a first-time investor?

Yes, if you are looking to invest for the "long term" - meaning five years or, ideally, much longer. If you are looking to park your money for a year or two then equities are probably not for you.

"If you feel comfortable doing your own research and want total control of your own affairs, why not invest directly?" asks Gavin Oldham of the Share Centre, one of the cheapest discount stockbrokers.

It is wise to invest in a number of companies. If you buy into just one or two you risk being over-exposed if their fortunes decline. There is no shortage of advice available on how to invest and how to find the shares best suited to your investment aims. Look at what is available in print and on the internet (the Motley Fool site at www.fool.co.uk has lots of information and entertaining bulletin boards). Proshare, which promotes private shareholding, has helpful fact sheets. The Association of Private Client Investment Managers and Stockbrokers (APCIMS) can provide a list of brokers.

Alternatively, get together with friends or colleagues and form a share club (see box). This is suitable for groups of up to 20 people who are prepared to put a regular amount into buying shares each month. Most advisers reckon that to have a suitably wide individual portfolio, you should invest pounds 10,000 or more.

Contacts: Proshare, 0171-394 5200; APCIMS, 0171-247 7080; M&G, 0800 390390; Newton, 0800 614330; Henderson, 0800 832832; Virgin, 0345 900900; Fidelity, 0800 414161; Share Centre, 0800 800008; Barclays Stockbrokers, 0800 551177; Lloyds Stockbrokers, 0345 888200.

SHARE CLUBS

Share clubs are a good way to invest with a group of like-minded friends. In effect a partnership, they allow up to 20 individuals to pool resources and buy and sell shares. Today there are more than 2,000 such clubs, with more than 25,000 members. Typically, members meet monthly, each contributing on average around pounds 25 to pounds 30 a month, says Proshare, the not-for-profit organisation that promotes private share ownership. Every club has an elected chairman, secretary and treasurer. Meetings should have a fixed agenda and formal minutes should be kept so that everyone knows what is going on. You will need to select a stockbroker and decide how shares should be held. A number of stockbrokers offer special deals including keen brokerage rates. Proshare sells a share clubs manual for pounds 25.

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