News1 min ago
Buying Shares
4 Answers
I'd like to start dabbling in the stock market a bit. However, i'm not looking to spend loads of money per transaction and it seems that most banks offer services that either charge a percentage or flat rate fee on a whichever is higher basis.
I was only hoping to spend less than �100 per transaction (ideally more like �50), but most flat rate fees seem to be at least �10. This means such a small transaction isn't economic as it costs �10 to buy and then �10 to sell - meaning my shares would nearly need to double to make me any money.
Does anyone know of a website, where you can make small transactions for a reasonable percentage, rather than a flat rate?
Cheers, MrP
I was only hoping to spend less than �100 per transaction (ideally more like �50), but most flat rate fees seem to be at least �10. This means such a small transaction isn't economic as it costs �10 to buy and then �10 to sell - meaning my shares would nearly need to double to make me any money.
Does anyone know of a website, where you can make small transactions for a reasonable percentage, rather than a flat rate?
Cheers, MrP
Answers
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Your quoted rate of 10 pounds is about as low as a commission from a discount stockbroker is likely to go, so you are correct in saying that buying 100 pounds worth of stock at a time is not economical.
But, there is a company in the US called Sharebuilder that offers very low commissions and allows you to invest small amounts at a time. They have licensed their concept to HBOS in the UK:
http://www.halifax.co.uk/sharedealing/products /halifax_sharebuilder.asp
commissions are only 1.50 pounds, and you can invest small amounts each month.
Having said that, I would not recommend doing this unless you already have substantial savings and are indeed just dabbling - ie this is money you can afford to lose. Better, in my opinion, to make regular monthly investments into a well-diversified index fund that invests in a basket of world stocks (why restrict yourself to the UK).
But, there is a company in the US called Sharebuilder that offers very low commissions and allows you to invest small amounts at a time. They have licensed their concept to HBOS in the UK:
http://www.halifax.co.uk/sharedealing/products /halifax_sharebuilder.asp
commissions are only 1.50 pounds, and you can invest small amounts each month.
Having said that, I would not recommend doing this unless you already have substantial savings and are indeed just dabbling - ie this is money you can afford to lose. Better, in my opinion, to make regular monthly investments into a well-diversified index fund that invests in a basket of world stocks (why restrict yourself to the UK).
As a postscript, the cost of trading (which is really just moving information from point A to point B, as trading moves off of exchange floors and into computers) is falling rapidly to nearly zero. Large institutions pay commissions of fractions of a penny per share; retail commissions ought to be following suit.
There are some banks and fund companies in the US that offer $0 commissions to larger customers.
There are some banks and fund companies in the US that offer $0 commissions to larger customers.
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