Hi Al,"At the Fool, we generally reckon that £2,500 or so is a decent minimum for a mechanical strategy, probably higher for a more active one (where you might deal more often and thereby pay more charges). There are various methods of building up this initial capital, but lots of Fools favour making regular monthly payments into an index-tracker."Could you explain this section a little bit more clearly?Certainly. Every time you buy or sell shares, you will pay a commission to a third party who conducts the transaction for you. This means that the less money you start with, the higher the percentage of your returns that will be swallowed up by these charges.That is why we generally find that it's a good idea to have £2,500 or so in spare money - money that you won't need for the next five years - before starting to buy shares. A "mechanical strategy" is one where you select the shares you buy and sell purely on the basis of calculations made from the company's financial characteristics and share price, rather than making judgments about its prospects by analysing the business, the quality of the management, and so on. It typically requires you to trade once a year; and the less you trade, the lower your commission charges will be. Mechanical strategies are featured in the Foolish Workshop, at http://www.fool.co.uk/workshop/workshop.htm, and on the related message board at http://boards.fool.co.uk/Messages.asp?id=2050001000000000For a more general starting point, and more details of index trackers, try the Ten Steps to Foolish Investing, at http://www.fool.co.uk/10steps/10Steps.htmHope this helps,Martin
© Copyright 1998-2013, The Motley Fool Limited. All rights reserved. This material is for personal use only.The Motley Fool, Fool, and the "Fool" logo are registered trademarks of The Motley Fool, Inc.Place of Reg: England & Wales. Company Reg No: 3736872. VAT Reg No: 945 6990 68. Registered Office: 5th Floor, 60 Charlotte Street London W1T 2NU.
Page load time and server: