How to Buy and Sell Shares on the Internet

Buying or Selling Shares – Top Tips

1. Use an online stockbroker who has research tools so you can learn all about your proposed investment.
2. Ask yourself- are there any Stock Broker views? buy? sell? hold?
3. Make sure you've researched the company. Visit the company web site.
4. Find out if the shares come with a dividend. If yes, what is the current share price yield i.e. the effective rate of interest you will be paid for owning the shares.
5. Decide before hand what price you are happy to buy at, what price are you happy to sell at and what would be a good profit.
6. Get yourself an online broker, its worth looking at the Alliance Trust Account for buying and selling shares online.
7. Consider setting a Stop Loss. If your share price falls 30% from your purchase price, your decision to buy may not have been a good one.
8. Never invest more than you can afford to lose in shares.
9. Decide if you want to buy a number of shares or invest an amount. There are dealing costs and stamp duty to consider.
10. If you are thinking about trading on a regular basis the Alliance Trust Savings share dealing service maybe the account for you with a low rate of £6.25. You can also have a ISA Share dealing account or a SIPP where you manage stocks and shares in your pension.

Shares can be bought and sold by post, telephone or online. Most people, however, now trade shares on the internet because it is the cheapest way of dealing. It is also quick and convenient.

Internet share dealing is ‘execution only’, which means that the broker carries out your instructions on what to buy and sell. No advice is given. When you buy shares, you pay 0.5pc stamp duty on top of the cost of dealing.

Some internet share dealing services buy and sell shares in real time so you know exactly the price you are paying for your chosen shares. However, not all services do this. Some bundle up deals throughout the day and only buy at certain times - usually at the end of the day - to keep costs down. With this, the danger is you may not buy or sell the shares at the price you thought.

It is likely your shares will be held in a ‘nominee account’ - basically the stockbroker holds them on your behalf, so your name doesn't appear on the company's register. This means you may not receive the company's report and accounts or any perks which holding the shares may attract. Dividends will be paid into your account.

As you don't hold the share certificates, you have to sell the shares through the broker you bought them from. Most brokers charge you a fee per stock if you swap to another firm.

Always compare prices across the board. Ask how much it is for a basic trade, for a frequent-trader service (if you expect to trade every day) and for other extras, such as the cost of a tax-free self-select ISA wrapper (where you choose the shares which sit in an Individual Savings Account). Basic trading begins at less than £10 per trade, although investors should be wary of offers that are suspiciously low - the price may rise in the future or the costs may be hidden elsewhere.

The first thing you need to get before you can buy or sell any shares is you need a Stockbroker.

Low Cost Share Dealing Accounts

With Alliance Trust you can:

• Open and trade online or by phone today
• Choose from over 4,000 investments on their i.nvest platform
• There is no inactivity fee and
• No annual administration fee
• Trade from only £6.25 per deal
• Trade in UK and international equities in over 18 countries and 21,000 global investments

Buying Shares

What Online Stock brokers offer

TD Direct Investing are a well respected online and offline share and investment company. You can set prices to automatically buy or sell shares at so for busy people who haven’t got the time to keep a daily eye on the markets or individual shares TD Direct Investing is a good choice.

A TD Direct Investing trading account lets you trade in UK equities, bonds and gilts, investment trusts, unit trusts & OEICs and Exchange Traded Funds (ETFs) as well as international equities on 17 international exchanges.

TD Direct Investing offer investor information like the professionals use and will cost a regular online trader £8.95 a trade.

The Share Centre (http://www.share.co.uk) is one of the cheapest players around for both one-off share buying and regular trading. It has a basic share-dealing service that charges 1% of the value of the shares you're buying or selling. There is a minimum charge of £2.50 for buying and £7.50 for selling.

You pay a £2.50 fee every quarter plus VAT on stock held in your account. Shares are bought and sold on a batch basis three times a day, so you won't know what price you're getting. The service is available online, by phone, post or fax.

For regular traders buying shares or selling shares, the Share Centre's Fastrack service costs £7.50 per trade in real time. You pay £80 plus VAT a year for administration charges on stocks.

The Norwich & Peterborough building society runs BrokerlineDirect.com which costs £11.95 per trade in addition to an annual fee of £10 and a one-off £10 signing-up fee. Shares are bought in real time.

Independent financial adviser Hargreaves Lansdown (http://www.hargreaveslansdown.co.uk) has a choice of services, including online-only, which has a flat rate of £9.95 per trade plus a quarterly fee of £12.50 plus VAT. Shares are bought in real time.

When to buy shares

Market timing is everything, you can buy shares in a good blue chip company in 2012, and the day you buy can make a huge difference to your overall return.

Timing is everything with shares, even if you want to hold for the longer term, take Aviva for example in 2011 they were as high as 470 pence and as low as 280 pence a share with no company statements to suggest that any fundamentals of the business had changed, of course all shares in 2011 had a volatile time due to the Euro.

Hence remember that buying shares is risky and they can go down as well as up, even in good solid business’s.

1 comments

R.N.Gajendran
01/01/2012

very useful Thank you

 

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