View the article online at http://citywire.co.uk/money/article/a465317
Diary of a dumb investor: picking a platform
I’ve just been given £10,000 to invest, and it’s burning a hole in my bank account as I hesitate over hurdle number one - which online platform to use.
OK, so I’ve just been given a load of cash to invest – if you didn’t read my first diary entry last week: a sweet £10,000 – and it’s burning a hole in my bank account as I hesitate over where, and how, to do so.
To start off, I want to thank everyone who made suggestions in responses to my first article. I learnt a lot, especially about the importance of doing due diligence ahead of picking an online trading platform.
Some of the advice was less useful, although pretty funny: ‘put it all on red!’ was one such nugget.
But also I noticed there was speculation as to whether I – and the cash – actually exist. Let me dispel those doubts once and for all: I am truly a dumb investor, and the money is really there.
I’ll prove this by going into the minute details of the profits and losses made, and charges incurred, as I make trades; and if this isn’t enough – I’ll also attach copies of statements on my portfolio (with my personal details blurred out, of course, to avoid a potential mugging by any criminally-inclined Citywire readers).
So, let’s get down to business. I went to moneysupermarket.com, a price comparison website, to find the cheapest trading platform on offer. I typed in that I wanted to compare charges over the course of a year, with an average of three trades per month, each with an average value of £500.
It came up a list of ten platforms. The cheapest, offered by SVS securities, charges £5.75 per trade with a total cost of £207, according to my specifications; the most expensive, offered by Hargreaves Lansdown, charges £14.95 per trade and with a total cost of £538.
My choice would appear pretty obvious. Yet on closer examination, I saw that not all of the platforms offered the same things. With SVS, I could only trade UK stocks, exchange traded funds (ETFs) and exchange traded commodities.
So I wouldn’t be able to buy shares in Facebook when it goes public. Or, for that matter, put my money in other funds, corporate bonds and investment trusts.
Moving down the list, I saw that Halifax, at No. 6 for value, offered a broad range of investment options, including: UK shares, unit trusts, gilts, corporate bonds, funds, investment trusts, ETFs and global markets. All at a cost of £11.95 per trade, coming to an annual total of £430.
That’s actually pretty disheartening, since it works out as 4.3% of my £10,000 (and not including 0.5% stamp duty) – which I would basically need to double to make the whole thing more worthwhile than sticking the money in a savings account.
But I’ve made up my mind: Halifax it is. I’m just going to try not to think about the charges too much. In fact, I’ll probably be too busy deciding what sort of assets I want to buy, which I’ll let you know in my update next week.
I’ll finish this week’s diary with lesson learnt number 2: investing is expensive and it’s difficult to get started. No wonder people are scared off.
News sponsored by:
More about this:
More from us
- Diary of a dumb investor: getting started
- Bond trading for private investors: is now the right time?
- Beating inflation: copper, tin and nickel ETFs
- Smart Investor: Facebook – here we go again
- How to save £1 million by 65
- Savers, now is not the time to lock away your cash
Tools from Citywire Money
From the ForumsForums are temporarily down for maintenance.
Weekly email from The Lolly
Get simple, easy ways to make more from your money. Just enter your email address below
An error occured while subscribing your email. Please try again later.
Thank you for registering for your weekly newsletter from The Lolly.
Keep an eye out for us in your inbox, and please add firstname.lastname@example.org to your safe senders list so we don't get junked.