Dicey times for investors
IT’S A troubling time for Irish investors in the wake of the collapse of another Irish financial institution, Bloxham Stockbrokers. The closure of the firm came as a surprise to many and while investors did not lose their shirts as a result, it is not an isolated incident in these volatile times.
For investors looking to trade the markets – and potentially those looking for a new investing home in the wake of Bloxham’s departure – there are plenty of options out there. The decision is who to opt for.
For low-cost trading, opting for an online execution-only service is usually your best option, and the good news is that these days most brokers are very open when it comes to disclosing their prices and charges – which makes it that bit easier to shop around.
Brokers charge in a variety of ways, usually by either a flat fee or a percentage of your total trade, so the higher the trade the more costly it can be if the broker takes a cut based on a percentage of your deal. In such cases, it might be better to look for a broker that offers a flat fee. For example, a €100,000 trade could cost you just €30 if such a flat fee applied – or a significant €1,500 if a fee of 1.5 per cent did.
Typically, you will do better if you’re a frequent trader. At TD Direct, a flat rate of €20 falls to €15 for those buying/selling on a regular basis. At Davy, the minimum commission for frequent traders falls to €15, or 0.5 per cent on amounts up to €25,000, and 0.25 per cent above this.
However, only very frequent traders usually benefit from such offers. At TD Direct, the frequent rate only applies to those who transact 10 or more trades in the previous three-month period. At Davy you have to transact 20 trades before you benefit from the reduced rate, while rates revert to the standard rate each January.
If you’d rather pick up a phone and speak to someone, you can do it on an execution-only basis – but you can expect to pay considerably more to do so. At Sharewatch it costs at least €50 for the pleasure of conducting your business in the old-fashioned way, while at Davy the minimum commission for telephone trades is €100 or 1.65 per cent of the first €15,000, 1 per cent on the next €15,000 and 0.5 per cent on the balance. At National Irish Bank (NIB), the telephone service costs a minimum of €50 or 1.5 per cent for amounts up to €15,000.
Sometimes additional requirements apply – at NIB you have to be a banking customer to trade with it.