Investors take charge of their own destiny
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Your support makes all the difference.Traditional images of pinstriped City stock- brokers minding the share portfolios of rich individuals are being consigned to history. Thanks to the growing number of online sites, barriers to share dealing are breaking down. The lower transaction costs available via the internet are attracting a wider range of people - not just the well-heeled.
Traditional images of pinstriped City stock- brokers minding the share portfolios of rich individuals are being consigned to history. Thanks to the growing number of online sites, barriers to share dealing are breaking down. The lower transaction costs available via the internet are attracting a wider range of people - not just the well-heeled.
"The internet has simplified the process of trading, made information a lot more accessible, and made transactions a lot cheaper," says Jane Drew, director of corporate communications at online stockbroker Charles Schwab Europe. "Individuals are becoming much more comfortable with technology and how to use the internet, and they can now take control and responsibility for their own actions."
For those who want to invest directly, there are numerous online share-dealing sites. NatWest, Barclays and the Halifax offer this facility, as do an increasing number of online stockbrokers, including Charles Schwab, E*Trade, iDealing, Durlacher's Nothing-Ventured, Sharepeople and Selftrade. Charges vary, as does the information provided, so check out a few before deciding which service to deal with.
Opening a share-dealing account is straightforward, and should take no longer than 10 minutes or so. Depending on the site, you will either have to complete an application form online or download the form, fill it in and post it off. You are legally required to supply a signature, so you will not be able to trade straightaway if you register online - it usually takes between three and seven days.
Credit checks will also be carried out before your application is accepted. Some online dealing sites are more stringent than others, so you may find your request is declined.
Although online share dealing has been around for a while, popular acclaim came both recently and suddenly.
"I could name the date that everything began to change," says Justin Urquhart-Stewart, director of Barclays Stockbrokers. "It was 11 September. Until then we were only doing a few hundred online transactions a day. Then it shot up to more than 4,000 a day."
The reason for this timing was the preoccupation among investors with technology stocks. Online brokers offered easy access to those wanting to try their hand at trading.
"People like having complete control over their finances, and the information available via the net means investors are far better informed and able to make their own decisions," says Peter Boucher, marketing director of Selftrade. "People have now realised that trading shares is a fantastic way of long-term growth for your investment."
"Long term" is the key phrase because stocks and shares is the riskiest form of investing. While many people made a lot of money quickly on the stock market between November last year and March this year, the market volatility over the past couple of months would have wiped out many of those profits just as fast.
"Invest rather than speculate," says Tony Easton, head of marketing at NatWest Stockbroking. "Day trading is not advisable and people should really be looking at shares as a medium- to long-term investment and not a way to make a quick buck. If you do speculate, don't play with more than you can afford to lose."
It seems, though, that few investors take massive gambles. "There might be a very small minority of inexperienced investors who feel that, with a few clicks of the mouse, they are budding entrepreneurs," says Neil Stapley, chief executive of Sharepeople. "But in the UK, investors and money don't seem to be easily parted."
Most online broker sites are execution-only, and it's up to you to research shares before taking the plunge. Some sites give more information than others, but investing direct should still be approached with caution.
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