Best Share Dealing Brokers

What is Share Dealing?

Share dealing is a way to buy shares in publicly listed companies, letting you build an investment portfolio, and then sell the shares at a later date, hopefully at a higher price than you paid for them – in which case you make a profit.

You can also make money by buying shares which pay a dividend. This is a reward that the company pays you for holding their shares, usually paid out twice a year. Not all companies pay dividends. If you do receive dividends you can choose to reinvest them back into more shares, or withdraw them as cash.

You buy shares through a broker, and the broker will deal in shares on a number of different markets – for example the London Stock Exchange (LSE), the New York Stock Exchange (NYSE) or the US tech market the NASDAQ.

Brokers offer a number of different ways to buy shares:

• An execution only account means that you have complete control and can buy and sell the shares without any guidance or advice. This means the performance of your portfolio is entirely your responsibility
• An advisory account means the broker will offer you guidance on which companies to buy and when to sell, but you still have the final decision on whether to follow their advice.
• A discretionary account means the broker will make trades on your behalf, without your authorisation – they manage the portfolio for you, for a fee.

Some brokers have an online platform so you can make the trades yourself on their website; some will take instructions over the telephone.

Usually when you buy shares through a broker you will not receive the share certificates, and you don’t receive any shareholder perks – for example you don’t have the right to vote in a company AGM.

Brokers will charge you fees: usually a monthly admin fee, and a commission on any trades.

You have to pay stamp duty when you buy shares (however, there are some types of shares where stamp duty doesn’t apply).

You will also have to pay income tax on any profits you make from share dealing, and capital gains tax if your profit exceeds a certain amount, unless your shares are held in a stocks and shares ISA.