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The Best Online Share Dealing Accounts for 2019

Updated: 18th January, 2019

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The numbers are definitive: over the long term, there’s no better way to grow your wealth than investing in the stock market. And thanks to the internet, it’s never been cheaper or easier to open a brokerage account and start investing.

Our top share-dealing account picks at a glance:


Hargreaves Landsdown

Good for: Long-term investing in shares

Our Rating:

StarStarStarStarEmpty Star

4.3 stars

Open Account

On secure website.

Features
  • First 3 trades are free for new customers
  • Market-leading platform
  • No annual fee for holding shares & ETFs
  • Lower share dealing fees if you trade more often

Open Account

On Hargreaves Landsdown’s secure website.

Our Bottom Line

Hargreaves Lansdown is the UK’s market leading share dealing broker, providing easy access to an extensive range of funds, ETFS, UK and overseas shares. HL offers a robust service with an easy-to-use website and plenty of free information to help make your investment decisions. In our view, the ‘Fund and Share’ account is great choice for long-term share investors looking to manage their portfolio online. New customers also receive their first three trades for free.

Full Hargreaves Landsdown review

Share dealing fee:

£11.95

Monthly account fee:

£0.00

The value of your investments can go down as well as up and you may not get back all the money you put in. All investments carry a varying degree of risk and it’s important you understand the nature of these risks.


Interactive Investor

Good for: Long-term investors, fund-focused investors

Our Rating:

StarStarStarStarEmpty Star

4.3 stars


Features
  • Account fee is applied as trading credits to offset commissions
  • Lower £6 commission rate for first 3 months
  • No custody fee on fund holdings


Our Bottom Line

Interactive Investor is a very well-known name in share dealing, and a good choice for long-term investors. Though the account fee isn’t ideal, what you pay becomes share-dealing credits (up to £90) and can offset your trading commissions. Interactive Investor is an especially attractive option for fund investors, as there’s no custody fee on funds. New customers also benefit from a lower commission rate (£6 per share deal) over the first three months.

Full Interactive Investor review

Share dealing fee:

£10.00

Monthly account fee:

£7.50

The value of your investments can go down as well as up and you may not get back all the money you put in. All investments carry a varying degree of risk and it’s important you understand the nature of these risks.


Fineco

Good for: Low-cost deals for active traders

Our Rating:

StarStarStarStarStar

5.0 stars


Features
  • Low trading cost
  • Up to 100 free trades over first 3 months
  • Especially good for trading non-UK shares
  • No annual fee


Our Bottom Line

Fineco is a new kid on the block in the UK and they’re making a splash. The service is highly competitive on share-dealing price (£6.95 for lower-volume traders) and offers particularly attractive rates for investors buying shares outside of the UK. Most investors won’t need 100 free trades over the first three months of their new account, so the current offer essentially means free trading for three months!

Full Fineco review coming soon!

Share dealing fee:

£6.95

Monthly account fee:

£0.00

The value of your investments can go down as well as up and you may not get back all the money you put in. All investments carry a varying degree of risk and it’s important you understand the nature of these risks.


Halifax

Good for: Fund-focused, long-term investors

Our Rating:

StarStarStarStarEmpty Star

4.3 stars


Features
  • No annual account fee
  • No custody charges for fund holdings


Our Bottom Line

If you are a frequent trader, the higher share-dealing fee at Halifax could be a bit painful. But for long-term focused investors that don’t trade very often, the lack of an annual account fee or custody fee on funds can be a nice benefit.

Full Halifax review coming soon!

Share dealing fee:

£12.50

Monthly account fee:

£0.00

The value of your investments can go down as well as up and you may not get back all the money you put in. All investments carry a varying degree of risk and it’s important you understand the nature of these risks.


DEGIRO

Good for: Extreme low-cost trading

Our Rating:

StarStarStarEmpty StarEmpty Star

2.9 stars


Features
  • Ultra-low dealing fees
  • Great choice for non-UK shares


Our Bottom Line

Yes, the share dealing cost really is rock bottom with DEGIRO. You don’t get the user-friendly, robust service with fundamental research that you do with others like Hargreaves and Fineco, but if you’re looking for low, low trading costs, DEGIRO could be a match.

Full DEGIRO review coming soon!

Share dealing fee:

£2.19

Monthly account fee:

£0.37

The value of your investments can go down as well as up and you may not get back all the money you put in. All investments carry a varying degree of risk and it’s important you understand the nature of these risks.


What is a stock broker?

You can think of stockbrokers as conduits to the stock exchanges. In exchange for a commission on every trade, they send your orders on to stock exchanges and market makers, which actually do the heavy lifting of matching your buy order with someone who wants to sell, and vice versa.

You and I can’t knock down the door to the stock exchanges and make a trade ourselves without a broker. In truth, the stock exchanges as we think of them from their depictions in movies and on TV don’t really exist today. Believe it or not, most trading actually takes place between computers located in dimly lit server rooms.

Just as the process for processing share trades has changed, the terms we use for the people and businesses who facilitate trades has changed, too. Today, instead of using the term “stockbroker” as an all-encompassing term for any person or firm that deals in shares, we generally divide companies into two categories: “discount brokers” or “full service brokers,” labels that better describe what they actually do.

  • Discount brokers — Online brokers are discount brokers. They aren’t in the business of giving you advice or phoning you up with share tips. Instead, discount brokers simply focus on the very basic service of helping you buy or sell shares (or other types of investments) when you want to do that from the convenience of your own home. Because discount brokers forgo many of the frills, they can price their services at rock-bottom prices. Many of our favourite online discount brokers charge £12 or less to place a share trade, a fraction of traditional brokerages charge. In addition, discount brokers also tend to have lower minimum investment requirements, some with no minimums at all, making them accessible for everyone.
  • Full-service brokers — Firms we label “full-service brokers” are more closely related to the stockbrokers of days gone by. Full-service brokers often employ human brokers who can help you make a trade, find funds to invest in, or make a retirement plan. That said, full-service brokers are costly, since people are inevitably more expensive than computers. A popular full-service broker, at a minimum charges multiples of what a discount broker would charge, and that can reach hundreds of pounds to buy a large amount of stock. Buying a fund through a full-service broker can potentially set you back even more, since they often charge fees equal to a portion of the amount you invest. Full-service brokers are more likely to have higher account minimums; some advisors only work with clients who have £1 million in assets or more!

Realistically, the lines between the two types of brokers are slowly starting to converge. Discount brokers now have wealth management services that offer the help of a human advisor at a full-service price. Some full-service brokers also offer a basic level of service at discounted prices.

Ultimately, it comes down to how much service you need and what you’re willing to pay. As self-directed investors who pick our own shares and funds, we’re biased by own our experience — we view the cost savings of a discount broker as being far more valuable than the personalized service of a full-service broker for our own portfolios.

How we find the best online brokers

We recognize that one brokerage can’t be the “best” choice for every single investor, so our view is that the best discount broker should thread the needle between offering the most functionality and perks at a price point that won’t break the bank.

The following features were considered particularly important in determining how to rank brokers you see in this list:

  • Commissions and fees — The key advantage of any discount brokerage firm is cost. Investors have come to expect that placing a trade won’t cost much more than £12 to £15. In addition to a low price for every trade, we also prefer brokers who charge little or no fees just to have an account.
  • Account minimums — We think having a low minimum account size is advantageous, particularly for beginning investors who plan to start small and add to their accounts over time.
  • Investment choices — While most brokers offer roughly the same solutions for buying individual shares on domestic exchanges, we think it’s important for a broker to have a large selection of funds to choose from, as well as cost-effective options for buying non-UK shares.
  • Research and screeners — One key feature of having a brokerage account is that you can get access to a second opinion when you need it. Many brokers offer a full suite of third-party research as well as share and fund screeners to help you sort through thousands of shares and funds on key parameters like their price-to-earnings ratio, or the annual fees of investing in a fund, for example.

Why investors use discount brokers

The online brokerage industry is still in its early days, but it’s becoming increasingly clear that discount brokers are here to stay. That’s because discount brokers are able to offer 90% of the service and functionality of a full-service broker at a price 90% lower than their higher-cost peers.

Self-directed investors who are capable of choosing their own shares and funds can save a fortune by using an online discount broker. Even today, many brick-and-mortar brokerage firms charge as much as £150 or more just to place a single trade to buy a share. Online discount brokers charge £12 to £15 for the same basic service of placing a trade.

And while discount brokers have a reputation for offering a “no-frills” solution to investing, they’re often matching many of the features you’d expect from full-service brokers. Here are just some of the features that you get from most discount brokers today:

  • Research — Many discount brokers offer access to research that provides a perspective on the investment prospects of individual companies and their shares.
  • Low minimums — Whereas some financial advisors and full-service brokerage firms often have certain minimums (say, £100,000), most discount brokers require a minimum account size of £5,000 or less. Many discount brokers have no minimums at all.
  • 24/7 support — Many brokers have customer service agents available around the clock. So, whether you need help placing a trade, or assistance to understand your latest statement, you can get the help you need with a simple phone call any time of day.
  • Access to your money — Discount brokers are often banks, too. One key advantage to having an account with a discount broker is that they offer free checks or ATM cards that allow you to withdrawal cash from your account as if it were an ordinary bank account.

How to pick the best broker for you

The best brokerage largely depends on how you invest. Investors who invest solely in individual shares and ETFs would want to seek out different features than investors who use funds alone, for example.

Researchers have concluded that an investor should own as many as 30 shares in order to have a truly diversified portfolio. Thus, investors who want to build a portfolio of individual shares may want to focus on the cost of trading, as the difference in price can add up quickly when investors place as many as 20 to 30 trades just to set up their portfolio.

Investors who use funds or ETFs may want to prioritize a broker with a larger selection of funds to choose from. Looking for a broker that charges low fees or, better still, no fees at all, on the funds that you hold.

Of course, convenience also plays an important role. If the bank that you already use also offers a share-dealing service, there are advantages to having both accounts with one institution. Though if that convenience comes at a higher cost — either for share deals or account fees — it’s worth considering just how much the convenience factor is worth.

How much money do you need to start investing?

While some brokers have minimum account requirements, the amount you need to get started as an investor has more to do with what you invest in than where you open an account.

Here’s how we think about the effective minimums for certain types of investments:

  • Mutual funds — Due to the paperwork and backend work of maintaining accounts, many funds have minimum investments, though there are exceptions to the rule. But in the case that a fund does have a minimum, that will dictate how much an investor will need to start with.
  • Exchange-traded funds (ETFs) — One advantage of ETFs is that they trade like shares, thus the minimum to invest in them is the price for one share. In this case, the minimum would get started would simply be the share price for the ETF in question.
  • Shares — Just like ETFs, the minimum amount to get started investing in shares is the price of one share. Shares of Unilever recently traded for 4,245p each, while Reckitt Benckiser shares trade for about 6,586p. Of course, when investing in individual shares, an investor doesn’t get the built-in diversification that comes with an ETF or fund, so while an investor can technically get started buy buying a single share of a single company, it’s ideal to have the funds available to start with at least a few shares in a portfolio.

Commission prices usually guide investors who are just getting started. Many new investors start with low-fee ETFs as a way to invest in a diversified portfolio with less than £1,000. Once an investor has a sufficient amount of capital, it can make sense to start investing in individual shares and pay the small commission price on every trade.

The table below shows how commission prices scale down as the amount you invest in each stock increases. For example, an investor who pays £12 to buy just £100 worth of shares would incur trading costs of 12% of the amount they invest.

Amount invested £15 commission per trade £12 commission per trade
£100 15% 12%
£1,000 1.5% 1.2%
£10,000 0.15% 0.12%

Importantly, you incur a commission to buy and sell individual shares and ETFs that are not commission-free. We like to think about trading costs in terms of how much an investment would have to appreciate in value to cover the cost of buying and selling it.

If you pay a £12 commission per trade, and buy £1,000 worth of shares at a time, the share would have to appreciate by just 2.4% to pay for the trading commissions. However, if you were buying £100 worth of shares at a time, the share would have to rise by 24% just to pay for the commissions.

This is why investors tend to stick to low-fee ETFs while accumulating assets. On small amounts of money, avoiding commissions is often the best way to generate a higher return after all the costs are taken into consideration.

How to buy shares online

Online brokers make buying shares online as easy as typing in a few numbers and letters and making a couple clicks. To buy a share, all you need to know is the company’s ticker symbol, which typically just a few letters long. For example, Marks & Spencer Group’s ticker symbol is “MKS,” GlaxoSmithKline’s is “GSK,” and Sainsbury’s is “SBRY.” (If you don’t know the ticker for a given stock, most brokers also allow you to type in the name of the company to find the ticker on the order page or in the broker’s trading platform.)

Your broker will ask what kind of trade you want to make when placing your order. The first type of order is a “market order,” which is essentially an order to buy a share at whatever price it takes to find sellers who want to sell enough shares to fill your order. You can think of this order as a time-sensitive order, where getting the order filled quickly takes precedence over the price at which your shares are bought or sold.

The second type of order is a “limit order,” which is an order to buy or sell a share only at a specified price. Shares of Rolls Royce (RR.) recently traded for 883p each, but you might only want to buy it if it falls to 800p or less. Placing a limit order to buy Rolls Royce shares at 800p per share tells your broker to buy the shares only if you can get it for 800p per share.

If you’re stuck on which type of trade is better, it’s a good idea to default to a limit order. That’s because you can have the certainty of knowing the price before the order is completed. In contrast, there’s no way to know with certainty at what price you will buy or sell share if you use a market order.

When trading less popular shares, market orders can be simply dangerous. If you place a market order to buy 3,000 shares of a share that only trades 100 shares a day, your order could easily move the price higher by several percentage points, forcing you to pay more than you wanted to for the shares.

Trading volumes are the highest in the first 30 minutes of a trading day (8:00 to 8:30 in London) and in the last 30 minutes of a trading day (16:00 to 16:30 in London). So, if there were ever a “safer” time to place a market order, the first and last 30 minutes of the trading session would be the time to do it.

Why you can trust us

Here at MyWalletHero, we provide expert reviews that highlight the things that actually matter when making decisions that affect your personal finances. We’ve published thousands of articles on sites well-known sites around the world, and sometimes we even get talked into putting on a tie to appear on TV networks. But don’t worry: You’ll find that our reviews are all jargon-free and written in plain English. As investors who manage our own portfolios through online brokerage firms, we have personal experience with many of the most popular online brokers which informs our view on brokers, how they compare, and pitfalls to look out for.


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