How does share dealing work?
If you're new to share dealing, have you thought of the reason why you want to start dealing in shares? Deciding what you want before you begin your hunt for the cheapest share dealing service will put you on the front foot immediately.
Discovering which share dealing account is the cheapest will come down to the type of share dealing you wish to pursue, the values of your funds and how you want to deal in shares - the most common include:
- Shared dividend reinvestment
How much does share dealing cost?
The majority of share dealing sites will offer cheaper charges the more you invest with them.
Some sites will charge you per deal, which is when you invest. There will be set charges for every time you deal, but the more deals you complete the cheaper they will become for the next month.
Many share dealing sites offer reduced deal charges when considering how many deals you had completed in the previous month and this means that you will save money on deal charges if you wish to complete multiple deals every month.
Any transaction that goes through your share dealing account will be liable for an annual management charge of around 0.45%, depending on the account you use.
Once you have decided how you want to use your share dealing account you will be in a great position to shop around for a competitive price.
How can you find a cheap share dealing account?
Finding the cheapest share dealing account heavily depends on how you wish to conduct your share dealing activity.
If you plan to make a small amount of deals then you can find an account that charges the least amount of money per deal, and if you are planning to trade on a regular basis you can find a share dealing account that will reward you with cheaper charges per deal.
How you arrange your trades can also affect the price, for example, if you complete a limit order you will not pay an extra charge if done online, however a charge would apply if done over the phone. A limit order is when you agree to buy or sell a share when the price drops to, or below, a price set by you. You will still pay a trade fee but this can be a great way to control the costs when dealing with shares.
If you plan to make a small number of deals for large amounts, you may want to consider finding a share dealing account that charges deal based amounts, but also an account that has a low annual management charge.
Does using cheap share dealing restrict cost you in other ways?
It is easy to get carried away with the basic charges, but it is important that you also compare all charges associated with share dealing.
Government taxes are applied to your share dealing activity, this can be as little as 0.5%.
Share dealing is dealing with calculated risks; you buy shares and sell shares. Whether you make or lose money on those shares is often completely out of your control so consider the risks in addition to the cost of set charges.
Will you be able to use different cheap share dealing companies at once?
You are not restricted to how many or how often you wish to share deal with multiple share dealing companies. You may wish to use a variety depending on the type of share dealing you wish to take on, spreading your risk between several companies.
Each account will have their own individual charges which you will need to research before spreading your share dealing activity between them. Using one site for regular transactions will reward you with cheaper fees so consider the cost of using multiple companies at once.
Can you shop around to find cheap share dealing offers?
Once you have determined how you wish to pursue your share dealing activity then you will be in a strong position to compare a variety of share dealing offers so you can find the best deal for your needs.
You can use our comparison table to find cheap share dealing websites, within each account they have their own individual systems which will require you to generate an account with them before starting trading.