In our series on investing for beginners, we add our first share to the portfolio.
We've been through the mechanics of getting a broker's account set up and making share purchases, and we have also briefly considered strategies and how to find ideas for shares to buy.
So we'll move on now and start to build a beginner's portfolio, holding around half a dozen shares in top quality companies. This is illustrative only, so we won't be investing real money -- but we hope our shares will do well over the long term, and we'll keep an eye on performance.
But our main purpose is to show how we might build a real portfolio in practice, and think about how we might watch over it. So over the next few weeks, we'll 'buy' our shares. And then we'll keep an eye on news releases from our companies, or news about our companies, as and when it comes along, and we'll do a review here from time to time.
The first purchase
The first share we're going to buy is Vodafone (LSE: VOD). Why? Well, it's a solid company in an international market that is still very much expanding, and I expect it to be still around in a couple more decades' time.
But also of importance, I think it's pretty good value right now, especially as forecasts suggest a very good dividend of 7.4% for this year, rising to 7.7% next and 8.4% the year after. The shares are on a modest price-to-earnings (P/E) ratio of just over 10, too, which is cheaper than the market average of about 14.
And earlier this week, I had a look at how well Vodafone's dividends have rewarded shareholders during the past few years when the FTSE 100 has been struggling. The total returns have been pretty good, and getting more than 7% a year for the next few years will do me just fine, even if the share price goes nowhere.
Let's do it
So, we made our purchase earlier this week using the Motley Fool ShareDealing service, and we invested the £500 that I think makes a sensible minimum investment amount. It looked like this...
As you can see, we got 289 Vodafone shares for 168.537p apiece, paid a fixed commission of £10 and stamp duty of £2.44, for a grand total of £499.51.
So that's our portfolio started, and we'll get looking for our next investment now. The next one will probably be another FTSE 100 share, and I already have a few pretty strong ideas -- but we're open to suggestions, so please feel free to offer your ideas, below.
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> Alan does not own any shares mentioned in this article.