Compare Stock Brokers in the UK
Use our stockbroker fees comparison to choose a stockbroker to help you buy stocks in the UK. Compare key features like fees and fund charges, research, added value and placing access or commission to find a low fee broker to profit from your shares. Capital At Risk.
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Buying stocks and shares can be a way to make a profit from companies listed on stock exchanges like the London Stock Exchange (LSE), New York Stock Exchange (NYSE) and other stock markets around the world.
Investors and traders hope to buy stocks and shares in companies listed on these stock exchanges in the hope that these companies will become more valuable over time meaning that the shares can be sold for a profit.
Other traders or investors buy stocks to receive a dividend from profitable companies that are performing well.
Stockbrokers act as intermediaries between traders and the companies on the stock market. By purchasing stocks and shares through a share dealing broker you can access companies listed in almost any exchange around the World and normally, make trades much faster than older methods like buying paper shares.
As well as stocks and shares brokers can offer you access to trade ETFs or Exchange Traded Funds, these products are specifically designed to track the performance of a particular index, sector, strategy or investment style and the funds can be traded in the same way as other stocks and shares.
Stockbrokers may also offer their clients access to the fixed income markets where they can trade and invest in bonds and other debt-related securities. Some stockbrokers also offer savings products such as ISA’s and access to mutual funds.
If you have paper share certificates or have inherited some recently, you can convert these shares into digital and online shares.
Doing so will mean that you can trade them more quickly and can mean you will pay less in fees each time you do.
Many brokers offer paper share conversion and the process normally begins with you opening a share dealing account.
How to Compare Stock Broker Platforms Online
Your choice of stockbroker financial service provider or any intermediary will often depend on your circumstances, requirements and expectations. Whatever your requirements, there are some straightforward rules and tips about choosing your stockbroker.
Which stockbroker is best?
Finding the best stockbroker or share dealing service will depend upon many factors.
If you have a large investment portfolio that you want a broker to manage for you, then you will be looking for a certain type of provider and that’s likely to be a different stockbroker from the investor who has a smaller portfolio, is cost-conscious and trades for themselves.
Comparison of stockbroker fees and charges is normally quite easy, but the cheapest stock broker won’t necessarily offer the best service for your needs.
Compare Fees and Charges
Account holding fees - some stockbrokers may charge you a fee for opening an account or a monthly subscription if it becomes inactive. Check each broker before you open a live account, especially if you are only likely to be actively making trades or purchasing shares infrequently.
Transact fees - most brokers will charge you for each trade you make, as this is where they begin to incur costs. Check whether the brokers you are considering charge these, who offer the cheapest rates and whether the charges decrease if you trade more often (sometimes called frequent trader discounts).
Commission - some brokers will charge a commission on your trades. This may be charged as a percentage of the profit from the trade or even as a percentage of the total value of your order. Brokers generally charge this on managed or advisory accounts and have an active role in helping you to profit from trades and investments you make in the stock market.
It may be a good way for inexperienced traders to get started but look out for brokers who charge these fees if you’d rather pay a flat fee upfront.
Depending on your budget, strategy and the duration of your investments, the cheapest broker for you may be very different from another trader.
The kind of service you want will also affect the fees and charges you will face. Execution only tends to be the cheapest, whereas you might pay more for advisory or discretionary services.
Every investor’s needs and requirements are subtly different so take your time and do your homework before making your decision.
It may be that you decide to have more than one stockbroking account, perhaps opening a discretionary or advisory account with one broker and a low commission execution-only account with another provider.
Compare the Service
Each broker is quite different in the features, research tools and aids to help you along in making trades. As well as very different layouts, styles and types of access to the markets.
Stockbrokers typically offer their services in three separate tiers that are based on a client’s classification, which are as follows:
Execution only: Under execution only a client makes their own investment decisions their stockbroker does not advise them but instead acts merely as their agent executing and settling trades. The broker will also provide their clients with contract notes, statements of account and access to an order routing service either online or via the phone.
Advisory: Not all stockbrokers offer an advisory service as it requires specialist, highly qualified staff and entails a higher degree of compliance. Those that do will tend to charge more for this service than they do for an execution-only service.
Prospective clients will need to complete detailed questionnaires before account opening to help quantify and assess their investment goals and attitudes towards risk etc. The broker will aim to tailor their advice to match those investment goals and risk attitudes.
Advisory services tend to be more personal than the execution-only service and clients will have a dedicated point of contact or advisors at the broker. Note though there is likely to be a minimum of level of investment or activity required to access these services.
Discretionary: Under discretionary management, a client hands over the running of their investment portfolio to their broker. These days this business is usually handled by the wealth management division of a stockbroker.
Robo investing: Many brokers now offer Robo-advisors or Robo-investing software bundled into their broker accounts to help you manage your investments. Robo-investing services tend to offer a bundled, pre-packaged set of funds to invest in based on the results of a questionnaire when you sign up.
Prospective clients fill out detailed questionnaires about their goals, financial status attitudes towards risk and sources of income. If your budget is large enough, the broker may also invite you to a face to face meeting.
This way the individuals and the firm who will be managing the portfolio know exactly what their clients are looking for and they, in turn, can explain the firm’s investment strategy and approach to the markets to the potential clients.
With this in mind, choosing the best stock broker for your needs might depend on which one you like using the most and which offers the best data to help you make informed decisions.
The best way to familiarise yourself with each different service and the features they offer is to open a demo account with each service and test out the account with demo funds or free credits before you commit real funds.
This way you can get used to the service and practice trading strategies to help ensure they will be profitable before you commit your own money.
The best brokers for experienced traders
The best broker for someone with lots of experience and is comfortable managing their portfolio and executing trades themselves is much more likely to be one which offers lower prices, rapid execution and access to a broad and diverse set of markets.
You may be more comfortable with an execution-only account which only connects you to the markets and offers little in the way of support or advice.
However, remember that you may still need to test several different accounts to find the right one for your needs based on fees and charges, speed of execution and the data they offer.
The best brokers for beginners or those new to the stock market
How to choose a stockbroker
Firstly, you must choose a broker you can trust, as sadly, there are plenty of share trading scams and fraudsters out there, so it’s best to always know exactly who you are going to be dealing with or through.
Here at Good Money Guide, we only list share dealing platforms from companies that are authorised and regulated by the Financial Conduct Authority (FCA). This means that they are duty-bound to protect clients’ money and follow trading and investing regulations.
You should also check out the company’s website and contact details and test them to make sure they are genuine.
Many stockbrokers will let you access a demo or trial account for free, before asking you to commit real money, so that you can practice trading and investing with credits to familiarise yourself with the service.
There are many factors to consider when you look to begin stock trading and doing your research before you begin could be the difference between success and failure.
- Understand the stock market
- Decide whether you want to;
- Invest in stocks or
- Trade stock
- Establish your strategy
- Open an account with a broker
- Practice with a demo account
- Test your strategy
- Begin trading
Understand the stock market
Firstly, it is a sensible idea to take some time to research the stock market, the companies listed there and how the buying process works along the chain.
On the one hand, companies use stocks and shares to raise capital as public IPOs and individuals who believe in the company and its success acquire these shares in the hope of making a profit.
Likewise, shareholders of companies who are facing trouble may look to unload their shares and hold their money as cash or invest elsewhere in lower-risk companies.
Stock trading is now primarily run online.
You will also want to get a good understanding of what kinds of things impact the price of shares. This will include things like;
- market sentiment
- Interest rates
- Earnings reports
- national economic data
- Global & national events which cause disruption
Investing vs. Trading
Investing is purchasing shares directly in the hope that the value of the company's shares will increase over time and can eventually be sold for a profit.
Investors generally hold on to their assets for much longer than traders, although this is not always the case, and may also benefit from dividend payments from their shares each year if the company they have invested in offers them.
Trading derivative products, such as stocks, bonds, commodities currencies and even interest rates, which take their value from the markets are the focus here. Traders don’t generally own the underlying asset but instead, look to profit from the rise and fall of the value of these assets over a shorter period.
These trades are generally executed via;
Generally, investing can be considered as a longer-term approach to making money from the stock market, whereas trading is generally a much more immediate approach.
Both investing and trading carry risks, so you should be familiar with each before you begin.
Establish Your strategy
A strategy for your investing or trading activities will be critical in helping you to achieve success.
This will need to go beyond just making money and should consider points like;
- Why you want to begin trading or investing
- Your goals
- Your budget and your available capital
- How much risk you are willing to take
- Your preferred markets
- How much time you can spend on it
You will also need to think about how you are going to be sure that your activities will be profitable, it could be that there is a level of trial and error involved in this, especially as you familiarise yourself with the markets.
Be sure to test your strategies with demo accounts before you commit your own money.
Open an account with a broker
Opening an account with a broker is normally as simple as signing up for any other online service.
You may need to provide the following details;
- Your full name
- Your email address
- Your phone number
- A valid form of photographic ID (passport or driving licence)
- Bank account details
Some brokers may ask you to confirm that you are an experienced trader before you can commit real funds to your account.
Test Your Strategy Practice using a demo account
Some brokers may suggest that you practice trading with demo funds before you start and this is recommended especially if you are new to the markets or are testing out new strategies.
Once you’re ready and happy and have refined your strategy after testing it, you can begin trading with real funds.
If you are new to investing tax-efficient wrapper that allows you to invest up to £20,000 in stocks and shares each financial year April to April.
Any profit made investments in stocks and shares ISA is free from capital gains tax and you’re also entitled to a £2,000 tax-free dividend in addition to your personal allowance (the amount you can earn annually before paying tax).
Dividend payments received above £2,000 are taxed at 7.5% for basic rate taxpayers or 32.5% for higher rate and 38.1% for additional rate taxpayers.
For tax efficiency reasons, stocks and shares ISAs make for a good starting point if you are looking to invest in and hold stocks and shares rather than trade.
You have up to £20,000 to invest each financial year, this figure does not roll on and accumulate year on year, if you do not use it one year, you will still only have £20,000 the next year.
However, you can buy and sell shares freely once you have invested your money, and transfer old ISAs into existing funds, so if your existing strategy isn’t profitable, you can sell existing shares and reinvest the money elsewhere an unlimited number of times.
Many brokers like IG, Hargreaves Lansdown and Interactive Investor offer stocks and shares ISAs as well as many high street banks.
Here is how to compare stocks and shares ISA accounts so you can find one that suits you.
Like investing in any stock market product, stocks and shares ISAs carry their own risks. The value of your shares could rise or fall and you may get back less than you originally invested.
Stocks and shares ISA’s are protected in a similar way to the protection offered by high street banks under the FSCS scheme, however investment products are handled slightly differently. If the firm holding your investment failed after 1st April 2019 your deposit could be protected up to £85,000, if the firm failed before this date, the maximum protection is likely £50,000. Further details of the investment protection scheme are available on the FSCS website.
This protection does not cover natural rise and fall in the value of your investment, only if all of your money is lost due to the collapse of the firm who manages your money.
You can use stocks and shares ISA performance tables to gain an understanding of their historic performance and decide which suits your investment needs.
What are the advantages and disadvantages of stocks and shares?
- Better returns than cash alternatives
- Low or no tax on dividends up to £2,000
- Capital gains are 100% tax-free
- Diversification - stocks and shares, bonds, and unit trusts are all available
- Flexibility to invest how and where you would like to
- Tax-free income in retirement - accumulation over multiple years could mean a large and diverse portfolio upon retirement
- The real value of your investment may fall
- Stock market volatility could affect your returns, which could be especially inconvenient if you are close to retiring and the value of your investments falls considerably.
- Charges & fees can mount up if you are not careful to manage them
- You must actively manage them, meaning you must spend time on them
- Interest rates can be very low, meaning that, unless the value of the shares increase or you are paid a dividend, then inflation could erode the value of your investment over time.
- Only tax-efficient if you use or exceed your capital gains tax allowance of £10,000 per annum
- Losses cannot be used to offset capital gains tax incurred elsewhere.
What can you trade through a stockbroker?
Firstly, of course, the stocks and shares of companies listed and quoted in the UK, depending on the broker you may also be able to trade in stocks from other markets such as Europe, the USA and further afield.
Some brokers will allow you access to trade ETFs which normally track the performance of a particular index, sector, strategy or investment style. Funds can usually be traded in the same way as other stocks and shares.
Access to other products such as fixed income markets for bonds and debt-related securities are offered at the discretion of the brokers themselves.
You can very often open savings products like stocks and shares ISA’s to keep your stock market activity in one place.
There are many types of shares you can purchase including listed companies from around the World.
Ultimately, the stocks and shares that you invest in or trade will vary and depend upon where your expertise lie, the markets and the companies that you are most familiar with as well as much more.
Some popular U.K. and U.S. companies to consider shares in are listed below
Listed companies in the UK are included on the FTSE 100 (Financial Times Stock Exchange) is the 100 largest companies in the U.K. and some popular companies include;
|BAE Systems||BA.||FTSE 100|
Companies are measured by their market capitalisation, essentially, what the company’s market value is.
FTSE 250 companies are the largest 101st to the 350th largest publicly-traded companies in the U.K.
US companies have shares listed on markets like the NASDAQ some examples of companies listed on the NASDAQ are included below.
|Advanced Micro Devices Inc.||AMD||NASDAQ|
The DAX 30 are the 30 most valuable companies in Germany. It’s index includes companies like;
|Advanced Micro Devices Inc.||ALV||DAX|
Different types of shares exist for you to invest in, these include;
Ordinary shares; these mean you part own the company that you have invested in. You will normally get a vote in company matters like agreeing to a takeover, paying company directors and more.
Preference shares; These shares carry no voting rights but you will normally get a share of the company profits before ordinary shareholders. Although the amount you get will be limited by the issuing company.
Can I buy penny stocks?
Yes, you can normally buy penny stocks when investing through a broker. IG offers access to over 9,000 shares from companies based in the U.K., USA and more. Penny stocks are normally priced at £1 or less in the U.K. or around $5 in the United States.
Penny stocks tend to be much cheaper to buy than shares in more well-established companies as can often be by newly listed companies who are looking to source funding. These shares are considered a riskier investment than those more well-established organisations.
Q. Where can I buy stocks?
A. you can buy stocks and shares online through a broker like those listed in our comparison.
Q. What is a stocks and shares ISA?
A. a stocks and shares ISA is a tax-efficient wrapper for investments made in the stock market. Purchasing stocks and shares through an ISA makes sense if you have ISA allowance left as you will pay less or no tax of any financial gains your investments make.
Q. How do I buy stocks and shares?
A. You can buy them through a broker or you can buy them in another way, choosing to buy them through a broker can offer several advantages but may cost a little more.
Q. Where can I learn to trade stocks and shares effectively?
A. There are plenty of resources online that can help teach you the basics of trading and investing in company shares. Our piece where to learn to trade can help get you started
Q. What is a stockbroker?
A. A stockbroker acts as an intermediary between traders and investors, it facilitates trades and investments normally for a fee. Some brokers can also offer managed accounts and advisory services to help you make a profit from your stock market activity.
Q. What are the best UK stocks to trade?
A. Here is an article which looks at some of the best U.K. stocks to trade and why.