Beginner's Guide To: Share trading
Saturday 14 March 2009
How do I get started?
First thing to do is find yourself a broker. Websites such as moneysuper market.com/shares can help you to compare the price of different brokers. Finding the best deal depends on what kind of trader you're going to be.
What are the charges?
Stockbrokers will typically charge you a set fee per trade – typically between £8 and £16 – and this may be reduced if you carry out more than a certain number of trades per quarter. Some brokers also levy a charge if you don't make any trades at all during a quarter, while others have a flat monthly, quarterly or annual charge. There's also stamp duty to pay on any share transactions, which is charged at 0.5 per cent of the value of the trade.
How do I know which account is right for me?
If you intend to trade infrequently, then paying a slightly higher charge per trade, in return for no inactivity fee or no administration charges, may make sense. For regular traders, it may be worth chasing the cheapest charges. You'll also need to consider whether you want to hold your shares within an ISA. This means there will be no tax payable on any capital gains that you make – but you'll usually have to pay a slightly higher fee for setting up an ISA, rather than a regular account.
How do I trade?
Most brokers allow you to trade via the phone or the internet – and some also offer the option of trading in a branch. The best have market and stock information on their websites, and make it very easy to carry out a transaction.
Can I buy other assets via my share account?
It's usually possible to buy mutual funds, exchange traded funds, bonds and gilts through a regular share trading account – and you can also trade more sophisticated products such as covered warrants and CFDs if you're willing to take a brief investor sophistication test. Some allow you to spread bet as well.
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