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Trading Stocks and Shares Online
Trading Stocks, Shares, Bonds and Commodities Online
How to trade shares on line and which broker to use.
Many online and high-street banks provide stock-broking services either online or by phone. This article is about what you need to get started and also some recommendations about brokers and investment web-sites available in the U.K.
For reviews of brokers Hargreaves Lansdown, SelfTrade and Interactive Investor and advice about how to trade shares, stocks, bonds and commodities and links to more of my investment and finance articles see below:
What are the Twitter community are investing in:
Disclaimer: Information in this and other linked articles is unregulated and for general information only and is not intended to be relied upon in making specific investment decisions. Appropriate independent advice should be obtained before making any such decision.
Selftrade is a very good choice for a company share trading account. There are several other trading accounts I would recommend for personal share dealing or spread-betting etc. depending on what type of transactions I want to make (e.g. some are better for foreign shares or for warrants etc.). You will however be a little restricted with the company account, because many of the inexpensive on-line providers do not allow business accounts. Selftrade does.
Selftrade has a low fee for regular investments. i.e. you set up a series of trades that you would like to occur once a month. This normally costs Â£1.50 per trade plus stamp duty, which is a good way to build up a balanced portfolio of a lot of shares for a small fee. There are restrictions however. You can only invest in FTSE 100 company shares, or a very small selection of investment trusts and ETFs, although these are chosen to give a good balanced mix from across the world. There is also just one day a month on which you can invest and the trades must be set up at least a day before. You can also invest in unit trusts for free, but then that is standard practice for most brokers, as they make their money from the bid-offer spread. The minimum amount per trade is Â£50.
Interactive Investor (www.iii.co.uk) has a similar deal, except the range of shares, investment trusts and ETFs available is enormous, including some very obscure smaller companies, with a fee of Â£1.50 and four days per month on which the regular investment may be made and a minimum purchase of Â£30
SelfTrade has a good web-site which is logically laid out and intuitive to use. For full details and a review of SelfTrade and how to use the web-site please see this Selftrade Review
Advantages: Easy to use website, business account allowed, good customer services
Disadvantages: Not quite the cheapest
Summary: Best for business accounts
Interactive Investor (www.iii.co.uk)
Interactive Investor (www.iii.com) is a free investment web site that gives a very wide range of investment services, advice and news. I have been using this web site for several years now, initially just as a portfolio tool, but eventually using them as an on-line broker and for financial spread betting. The trading tools are sophisticated and reasonably priced, with a good basic share trading account and low-cost regular investment options or spread-betting, CFD trading and even LSE level 2 data for very active traders or "day-traders". They also provide tools to help choose the best mortgage, credit card, life insurance and loan deals available and ISAs and SIPPs can be opened and operated through this web site.
For a full review of this excellent stock broker and their web-site please see this Interactive Investor Review
More investment books
Interactive Investor web-site features
For the full list of features and how to use the account: Interactive Investor (www.iii.com) ReviewNews, Markets and iBall TVShare DealingTransferring fundsDiscussion Boards and Mailing Lists
Advantages: huge variety of services, investment tools, inexpensive share trading, news
Disadvantages: News pages look a bit boring
Summary: One of the best UK investment websites
Hargreaves Lansdown is one of the best brokers for fund investing (unit trusts, OEICs or Mutual Funds) whereas Interactive Investor and Selftrade are more geared towards active investors or those who favour exchange traded funds (ETFs) or Investment Trusts. All of these brokers provide low-cost ISAs and personal pensions/SIPPs
Perhaps the biggest drain on investment returns, when buying managed funds, is the fees charged by the financial services industry: over-generous investment management fees, trading fees and advertising costs initial sales commission and annual commissions paid to the origial advisor who sold you the product. By investing with Hargreaves Lansdown you can at least reduce or eliminate the last two charges (Hargreaves Lansdown return all or most of the initial sales commission at time of purchase and most of the annual commission in the form of a loyalty bonus (in an ISA, but not in a SIPP)
Alternative Good UK Stock Brokers
There are many other alternative on-line stock brokers in the UK which you may want to consider: Hargreaves Lansdown is another very good stock-broker offering similar services to SelfTrade and Interactive Investor although their emphasis is more towards unit trusts and OEICs than shares or Investment Trusts and they provide very good discounts on most unit trusts. As a result they are often described as a "fund supermarket".
Other good on line brokers include: TD Waterhouse; Barclays Stockbrokers; Halifax; E*Trade.