Share options – buying and selling and how best to do it
If you’re going to dabble in shares for the first time or venture online rather than maybe through the more traditional channels, where do you start?
Of course the advice for most investors is to buy and hold rather than trading frequently; it would be a foolish investor who decided their trading behaviour mainly on the basis of an attractive high frequency rate from a broker.
Remember, stock trading is not all about maintenance fees or transaction charges. If you’re looking to buy US stocks, for example, be prepared to pay additional charges.
Campbell O’Connor has a minimum commission charge of $50 (€37, compared to €25 normally) for US and Canadian transactions, while at Goodbody you will pay an extra charge of €19.05 to cover the cost of holding and transaction fees passed onto it by its US custodian agents. Foreign exchange fees are also often levied.
TD Waterhouse, for example, charges a spread of up to 2 per cent depending on the value of the transaction, so a US trade valued at €10,000 could cost you an additional €200.
Remember, too, if you’re buying an exchange traded fund (ETF) in addition to any brokerage charges that might apply, you will also be charged an annual management fee by the fund provider. iShares, for example, has a total expense ratio (TER) or annual charge of 0.4 per cent on its FTSE 100 ETF.
If you are an infrequent trader, you can expect to pay an inactivity charge. Sharewatch, for example, charges £25 a month if you trade fewer than three times a month.
If you are a customer of Danske Bank you will need to find a new home for your portfolio unless you want to cash out altogether.
According to the bank, its online trading service – which had a minimum transaction fee of €20 – has already been withdrawn for new customers.
However, if you are already a customer, the service will stop in the first half of 2014. A spokeswoman for the bank said it would write to customers giving them two months notice before this happens.
When doing so, look for a provider that will do transfers “in specie”, which means they won’t have to sell and re-buy any of the assets, thereby avoiding commission charges and exit penalties.
Davy Select, for example, has indicated that Danske Bank clients can transfer to them (shares, bonds, ETFs, and funds) without incurring any transfer costs.
And finally . . .
Remember that stamp duty also applies to your share purchases when buying Irish stocks (1 per cent) or British stocks (0.5 per cent. However, thanks to Budget 2014, if you buy stocks listed on Ireland’s junior ESM market, you will no longer have to pay stamp duty.
Names listed on this exchange include First Derivatives, Fyffes and CPL.