Compare share-dealing platforms
What is a share?
Let’s start at the start. A share is basically a portion of a company. When you buy a share you’re buying a small portion of the company.
OK, so what is share dealing?
Share dealing is a form of investing. It means you buy company shares, and hopefully make a profit by selling the shares on for a higher price later down the line. There’s always risk involved though, and sometimes shares lose value.
How to buy shares
The simplest option available is to buy shares online through a “share-dealing platform” (or broker).
Most platforms let you purchase shares from any company listed on the stock exchange.
There’s the London Stock Exchange, which includes the big names like Barclays, Vodafone, easyJet and Sainsbury’s. The FTSE 100 Index shows the top 100 companies listed on the London Stock Exchange.
Then you’ve got the Alternative Investment Market (AIM) which is a subsidiary of the London Stock Exchange. The AIM lists new, growing companies that are less well known.
Only companies which have ‘floated’ on the stock exchange can sell shares publicly. If you see it listed, you can buy shares in it! It’s that simple.
Once you’ve identified the shares you want to buy, you’ll have to set up a share dealing account, and link it up to your bank account or deposit money in it to buy the share.
We’ve got a full start-to-finish guide on how to buy shares which you might find helpful.
Did you know?Companies usually get listed on the stock exchange when they’ve done an Initial Public Offering (IPO). This can also be known as floating, flotation, or just ‘going public’. There are other ways a company can become listed, for example by being taken over by an already listed company.
How to hold shares
Most online share dealing platforms hold your shares on your behalf. This means you’re still the legal shareholder, but your name won’t appear on any company’s share register.
In your early days of investing, it’s tempting to check your shares all the time. But as time goes and your portfolio grows you’re likely to forget – so keep a track of everything!
If you’re building your own portfolio it’s important to check things regularly and make adjustments to respond to real-world events.
How to sell shares
Selling shares is simple too. Most share trading accounts let you sell shares in two ways:
- Sell a certain number of shares.
- Sell a certain value of shares
Once you decide to sell and place your deal, you’ll be quoted a price. This price isn’t usually locked in, just an indication of the price at that time. The money you get may not be the exact same amount.
What costs should I look out for?
After you’ve set up an account you’ll be able to browse for shares to buy. You can select to purchase shares based on quantity, or based on value. Once you’ve purchased your shares, they will appear in your portfolio.
It goes without saying that online share dealing platforms need to make money. The main way they do this is through various fees and charges.
Here’s a list of some of the ones to look for:
- Account fee. This charge might be monthly or annually.
- Inactivity fee. Some platforms will charge you if you stop trading, but this is a decreasing trend as more providers compete for customers.
- Price per trade. This is what it sounds like. The more often you trade, the more likely you’ll get a discount on this.
- Stamp Duty Reserve Tax (SDRT). UK shares traded electronically incur 0.5% SDRT.
We’ve also got a more comprehensive guide on investment fees that’s worth checking out for more info.
How do I choose the right platform?
When deciding on a share dealing broker/platform, there are several points to keep in mind, including the following:
Frequently asked questions
Warning: The value of investments can fall as well as rise, and you may get back less than you invested. Past performance is no guarantee of future results.