Many aspiring investors have problems in getting started as they do not know much about the nitty-gritty of investing. There are many potential investors who want to buy securities online but do not know how to go about it.
Historically, the equity and debt instruments were bought in the form of physical certificates. With the evolution of stock exchanges and technology, these instruments can now be bought in electronic form or dematerialised form. Nowadays, we the technological revolution, online investment platforms are of easy access that enables us to buy and sell securities at our convenience by just a click of a button.
While choosing an online investment platform, there are various factors to look at, but two important things the prospective investors must consider: costs and functionality. In an ideal account, the fees should be as low as possible. There are many kinds of charges which take away a major chunk of profits as the investment platforms feed on these charges. Initially, these charges might seem small, but they can erode major profits and benefits of compounding in the long run. Therefore, investors should consider an investment platform, which charges minimum fees.
The fee can be broadly classified into two categories: Ongoing fee (Admin fee) and Trading fee. If an investor makes frequent transactions and looks to invest for the long term, he should opt for an account which charges a fixed Admin fee. People who do not make frequent transactions should consider accounts, which charge percentage-based Admin fee based on the number of transactions made. This is because a small percentage of fees can add up to a large amount when multiplied by the cost of total portfolio, and equally spending a large admin fee would not make sense. This fee can be charged monthly or annually.
Frequent traders should consider the trading fee, which is a direct function of a number of transactions made for buying and selling securities. A lesser frequent trader rate or regular investing option should be considered while choosing an account. Theoretically, the trading fee should not exceed one per cent of the trade.
Functionality is another major factor which should be considered while choosing the trading account. Some of the platforms provide limited access to securities. Some of them exclusively deal in funds or equities.
To decide the best fit for you, let us understand the three types of investors, one, which would broadly define your needs and eventually help in deciding the right account. These are the Cash poor investor, the Cash-rich investor and the Fund investor. The Cash poor investor and the Cash-rich investor are active investors. Fund investors are mostly passive investors who do not bother about tracking and timing the market.
Another important criterion for investors while choosing online platforms, is the availability to make ISAs (Individual Savings Accounts) investments. ISAs is a government incentive for UK residents to invest up to £20,000 per Financial year as a tax-free investment.
Considering the aforementioned factors, we would discuss Top 5 Online Share Dealing Accounts, which can help you serve better.
- AJ Bell Youinvest
This trading account is for Cash poor investor or beginner. This account is suitable for non-frequent traders with smaller portfolio and charges Admin fee as a percentage of the portfolio. The account offers a research summary, investor articles at your fingertips through a mobile application. It also charges a lesser percentage fee per transaction in comparison to its competition. The account has a huge selection of securities and allows customisation of your portfolio.
- Interactive Investor Share & Fund Account
This trading account is for Cash-rich investor or frequent traders with a larger portfolio. The account has one of the cheapest rates in terms of Admin fee, which is charged as a fixed component and not on a percentage basis. The account offers a research summary, investor articles at your fingertips through a mobile application. The account has a huge selection of securities and allows customisation of your portfolio.
- Hargreaves Lansdown Fund and Share Account
The account offers ISA investments. The account is suitable for lumpsum investors and provides seamless customer service. The account provides with a wide array of investment opportunities by hosting securities from different markets across the globe. It is a top-rated account in terms of reliability with a huge customer base. However, the account charges high fees and forex charges.
The account offers ISA investments, and this account is suitable for passive investors with little money in the pocket. The account allows investing in low-cost index funds. The platform fee is much lesser in comparison to the competition, as it provides limited functionality. The funds enable investors to diversify the portfolio without taking the pain of timing the market. The account is accessible through the mobile application as well as on the web. However, the account does not support investment in individual securities.
- IG Share Dealing
The account offers ISA investments. This account is likely to suit most of the investors. The account offers a great range of stocks and index funds. The fees charged are comparatively, less and free trades are offered sometimes. The account provides both investing and the trading platform. From ETF’s to Bitcoins, the account offers a wide array of choices. The account is accessible through the mobile application as well as on the web. In addition, the account offers excellent tools for analysis.
All these above mentioned Online Share Dealing Accounts, offer lots of benefits, and do have some shortcomings as well, any prospective investor should thoroughly go through the terms and conditions detailed by the company and check the current fees being charged before opting any of them. There are some stocks which deal in the online trading platform services, let us discuss a few of them.
- IG Group Holdings Plc (LON: IGG)
United Kingdom-based Financial services company, IG Group Holdings Plc is primarily offering online trading. The company seem to be unfazed by the Covid-19 crisis and has delivered 45 per cent price return in the one-year period. The company’s share currently trades at GBX 777.50 on 27th May 2020. The annual dividend of the stock stood at 5.40 per cent.
- AJ Bell Plc (LON: AJB)
United Kingdom-based Financial services company, AJ Bell Plc is primarily offering online trading platform. The shares of the company clocked a bottom of GBX 246 on 23rd March (when the lockdown was imposed). Since then, the shares have given 53.25 per cent price return. The company’s share currently trades at GBX 384 on 27th May 2020. The annual dividend of the stock stood at 1.28 per cent.
- Hargreaves Lansdown Plc (LON: HL.)
Hargreaves Lansdown Plc (LON: HL.) is one of the top investment marketplaces for retail investors in the United Kingdom. The shares of the company clocked a bottom of GBX 1,158 on 23rd March (when the lockdown was imposed). Since then, the shares have given 55.44 per cent price return. The company’s share currently trades at GBX 1,769.50 on 27th May 2020. The annual dividend of the stock stood at 1.92 per cent.
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