Before considering how to buy shares, you should ask yourself a few key questions to identify the type of investor you are:
How often will you trade?
Every time you trade you will incur a commission charge (plus a tax called Stamp Duty). You should find out how much this is and whether it reduces when trading frequently.
What will you be trading?
Some investors are happy with a relatively narrow choice of shares, however, should you want to trade international shares plus perhaps other securities such as bonds and funds, pick a broker who offers them all.
Do you want share certificates?
These days share certificates are largely meaningless since legal ownership of shares is now recorded electronically on a register. That said, if you would still prefer to have shares certificates and/or hold shares in your name rather than that of your broker (as “nominee”) then ask about it and find out what it will cost.
Will you be buying using tax wrappers?
You can buy shares inside tax-efficient wrappers such as Individual Savings Accounts (ISAs) and Self-Invested Personal Pensions (SIPPs), or outside them. Find out whether your provider offers these services and at what cost.
How much help do you want?
Some investors are happy fending for themselves when it comes to investing, perhaps because they already have a decent level of knowledge and experience/ Plenty of others however prefer to seek help. How much will affect the type of broker you choose: