If you are confident in your ability to buy and sell shares, then an execution only account could save you money.
An execution only share dealing account lets you buy and sell shares without getting any advice first, meaning you can avoid paying any advisory or management fees.
Benefits of execution only
There are several benefits to execution only share dealing:
Access to information and charts in real time
Buy or sell shares faster
Lower trade charges
No advisory costs
What charges to look out for
There are three main charges to look out for when choosing an execution only share dealing account:
Charge per trade: This is what you pay for each deal you make, whether you are buying or selling shares, e.g. £8 per trade.
Platform fees: This is what some brokers charge for using their platform, which can be taken monthly or annually, e.g. £50 per year.
Transfer fees: This is what some brokers charge when you transfer money out of your account, e.g. £25 per transfer.
Some share dealing companies offer a frequent trader rate, which reduces how much you pay for each deal you make. To qualify for this rate, you need to make more than a set amount of deals in the previous month.
The cost of each type of charge varies depending on the share dealing company you choose, so compare as many as possible to get the cheapest deal.
What other options do you have?
There are two more types of share dealing broker you could choose from:
Advisory: You get advice on which shares to buy and sell, but it is still your decision
Discretionary: You give authority to your broker to buy and sell shares on your behalf
Execution only share dealing FAQs
Can I get advice with an execution only account?
No, you will need to choose an advisory or discretionary broker for advice on which shares to buy and sell.
Can I buy shares in any company?
No, only companies that are listed on stock exchanges, like the London Stock Exchange (LSE) or the Alternative Investment Market (AIM).
Do I pay tax on share dealing?
Yes, any profits are subject to Capital Gains Tax and you also must pay 0.5% Stamp Duty. Here is more on investment tax.
How can I cut the cost of share dealing?
If you plan to make several trades each month a frequent trader account could reduce your cost per trade. Check the terms with each company.
Can I deal in shares through a mobile app?
Yes, but only if the company offers a mobile app. You still need to open an account online and add money before you can make any trades on the app.