How to Buy and Sell Shares on the Internet

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 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, the Share Centre's Fastrack service costs £7.50 per trade in real time. You pay £75 a year for administration charges plus VAT 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. Shares are bought in real time.