There is a 0.5% stampt duty tax on UK shares that is paid to your broker on share purchases and passed on to the Goverment. May not sound much, but on a £10k trade it's £50. To avoid it, you could go for foreign shares which are largely exempt. Most on-line brokers now offer a range of foreign shares - assess the breadth of the range before you dive in. Going global in your investments also gives you access to the best opportunities. After all, if the UK market is performing badly, it's a difficult job trying to pick winners.

 

Alternatively go for Exchange Traded Funds (ETFs), which also are free of stamp duty. These work in the same way as index-tracking funds (e.g. tracking the performance of the Brazilian stock market as a whole rather than buying individual Brazilian stocks), but you can buy and sell them during the trading day like shares. Search for Ishares on your on-line broker and a range of ETFs will be returned. Some ETFs track country specific indexes, others track commodities such as oil, gold, coffee or corn. Another advantage of ETFs is that you are not exposed to the danger of going bust that accompanies a single company share.

 

Finally, there is spread betting, which not only is free of stamp duty but also there are no dealing fees and all gains are capital gains tax-free. Spread betting can be undertaken on individual stocks, indexes, commodities, pretty much everything. However, it is high risk in that you can lose more than your original stake. Spread betting firms quote a future price band for a stock, index or commodity. If you think the price will exceed this you can bet, say, £10 for each point (pence) above the band. So, you are leveraging the underlying investment and stand to make much more than if you were just invested in the stock. Equally though, if the price drops then you will also be liable for £10 for each pence downward. Take advantage of the spreadbetting introductory offers: see this page for details. 

 

 

 

Unless you are soley in invested in UK domestic companies that only have UK customers, then the movement of currencies will impact your investments. Most UK blue chips are active in many foreign markets, meaning their incomes are in a range of currencies, which when translated back into sterling or dollars for accounting purposes are very much influenced by exchange rates. Now as advised above, to give yourself the best chance of high returns you should be looking global in your investments. In the last 5 years the best returns have come from emerging powerhouses such as China and India, and countries rich in natural resources, such as Brazil and Russia. Japan has emerged from its long recession and perhaps offers good future returns. The UK has performed well too, but you should always target the very best performing investment markets. By investing in funds or ETFs you can tap into these markets. However, by doing so, you are exposed to the performance of the respective currencies versus sterling. Let's say you invest in a fund that tracks the Thai stock market and Thai stocks rise by 15% over a 1 year period, but at the same time the baht currency drops versus sterling by 15% then you will effectively make no gain, and this will be reflected in the fund's daily performance which is presented to you in sterling, so net of stock price movement and net of exchange rate movement. If you want to follow the source of the fund's fortunes you need to be looking at both the stock market performance (e.g. on Bloomberg) and the currency performance (e.g. on BBC Market Data), and more importantly you need to be following the forecasts and predictions for the future stock market and currency performances, in order to judge where you should be investing. Over the past 12 months sterling has risen against most currencies, because of the strength of the UK economy and the steadily increasing interest rates which attract money into the country. This has reduced returns from overseas investments. Whether this continues depends very much on whether the housing market maintains its strength and whether the Government can reign in the widening trade deficit. You can follow currency and exchange rate news and predictions on Bloomberg and ADVFN.