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Share dealing is done
by post, by phone, or online. Internet trading is currently the most
popular as it's the cheapest way of dealing and it offers the most
convenience. Brokers offer accounts, with varying levels of service
depending on how much an investor pays.
accounts are for those investors who know what shares they want to
trade. Given that these accounts require no advice from a broker,
they are the cheapest. An advisory service is one offered by private
client stockbrokers where the broker will give recommendations as to
shares investors should buy and sell. Discretionary services
completely control one's portfolio. The investor gives the
stockbroker the authority to deal shares on their own, within set
parameters. It's the most expensive option and is usually reserved
for wealthy investors – those with £50,000 or more.
Types of Service
various types of share dealing services. For example, some let
investors place a price limit for buying and selling shares. Some
brokers charge for these limit orders, while others do not. Some
brokers allow for orders "out of hours," with the deal being placed
as soon as the market opens. Also check if a broker deals in foreign
shares, as not all of them allow it. And always read the small
Share dealing online
is execution-only. Most brokers will hold an investor's shares in a
nominee account on their behalf. Investors receive no documentation;
instead the broker keeps the papers unless the investor needs to
take some action. Dividends are automatically placed in the
investor's account. Many online brokers charge an administration fee
to handle this paperwork, though some offer it for free.
Batch dealing is a
service for smaller investors. An investor puts in a buy or sell
order, which is then lumped together with many other buy or sell
orders, and they are all put through together. This dramatically
reduces the costs, but the investor won't know the price of the
shares until the deal is done.
Price of Share Dealing
An investor can start
basic trading at less than £6, though they should be wary of deals
that seem too low. Investors should always compare prices of all the
options, whether it be basic trading, a frequent trader service, or
others. Investors should also ask if the broker charges for moving
one's account to another firm. And don't forget about the 0.5% stamp
duty when one purchases shares.
Modern share dealing is extremely accessible thanks to the Internet.
Small investors can handle their portfolios independently, though
help is available if they require more advice.