Personal Finance: Internet Investor

THERE IS an old stock market adage that you will surely have come across: "Sell in May and go away." If that is the case I am left wondering why several stockbrokers have chosen the summer to launch online share-trading systems.

Within the next two months, the choice of UK-based online brokerages is likely at least to double. However, you will still be able to count the number of UK brokers with Internet trading systems on your fingers, compared with the 100-plus in the US.

Some of these US services have aspirations beyond being stockbrokers, running electronic communications networks to compete with the established markets such as the New York Stock Exchange and Nasdaq-Amex. However, virtually all the online services on either side of the Atlantic are execution- only.

The independent private client brokerage Killik & Co aims to offer the UK's first online advisory service. Killik is currently testing its online trading facility, which includes an on-screen click button that will get a broker to call you if you need to speak to one. This service is due in July.

In the last week Merrill Lynch, the biggest private client brokerage in the US, unveiled its plans for an online dealing service. However, while Merrill Lynch's service is pitched to compete directly with that offered by Charles Schwab, it is of no benefit to us in the UK. The company says the earliest it is likely to consider taking on foreign private clients over the Internet is the end of this year.

Despite this and the discouraging response I received from many US brokers, which I commented on last week, there are some who are prepared to deal for you. Among them is Ameritrade - all you pay is a flat fee of $8 for online trades, regardless of deal dimensions.

Aside from whether you think share prices in the US are overvalued, there are a couple of pluses to investing on Wall Street and one significant minus. Let's take the bad news first: currency risk. You earn your hard- earned money in pounds sterling. To invest in US shares you need to change it into US dollars. This leaves you open to the danger that any appreciation in the value of your investment could be more than wiped out by an adverse movement in the sterling/ dollar exchange rate.

If you are prepared to take that risk, there are benefits to be enjoyed. Among them, your dealing costs will be much lower. Uncle Sam does not charge stamp duty on share transactions and bid/offer spreads (the difference between the price at which you buy and sell shares) tend to be much smaller in US shares than they are in the UK.

You will not be able to open an account with Ameritrade online, although you may request account-opening details from the broker's website. Still, you will receive a package of forms and information by mail for you to fill in and return.

One of the most important pieces of paper you need to deal with if you are going to invest in US shares this way is a W-8 form, which identifies you to the US Internal Revenue Service as a non-US resident and, therefore, exempt from paying US taxes.

Return these forms and the broker will open an account for you. Get your bank to transfer funds into your trading account and Wall Street is yours for the taking - maybe.

Killik & Co: www.killik.co.uk

Ameritrade: wwws.ameri trade.com/cgi-bin/mailap.cgi

Robin can be reached at RobinAmlot @aol.com