By Myron Jobson For Thisismoney. Investors have been offered the chance to buy and sell shares for free by Trading 's newly-launched DIY investing platform. The new platform will pit Trading against Hargreaves Lansdown, Fidelity, Interactive Investor and rivals, in the bid to win investors' capital. Trading 's eye-catching offer is sure to tempt some share-buying investors away from the big guns, with the opportunity to slash buying and selling costs.
However, it does not offer an Isa or a Sipp account and nor can investors hold funds on the platform. The cost of buying and selling shares has fallen steeply since the start of the s thanks to a digital revolution. In the not too distance past, investors who wanted to buy and sell stocks and shares would have to do this through a stockbroker or a financial adviser who took a sizeable chunk of commission with every deal.
Club Finance's Frequent Trader initially charged just 50p for share dealing, in , with an annual fee of 0. That has not yet arrived and Trading has beaten it to the free share-dealing punch. Trading has operated an online commodities and currency trading platform in the UK for three years and in Europe for over a decade. Where can you invest? At present, the platform hosts 1, investment opportunities comprising of shares in companies based in the UK, the US and in some European markets; listed investment trusts and exchange traded funds.
The firm expects to increase this figure on an ongoing basis over the course of the coming weeks and months - starting with the addition of US stocks in the next week.
Those seeking to invests in funds and other assets such as bonds would have to look somewhere else. It estimates this will cover the needs of around 90 per cent of its customers. The platform also offers analytical traders tools and social media integration - giving customer access to a live chat room and video tutorials. How does the platform make money.
Trading says that share dealing is not expensive and the charges paid by UK investors at the moment are very high. Brokers are charging multiples of the actual cost of executing a trade, not margins. This is all well and good but many investors would question how the platform will actually make money. The charges levied on large and active users of the platform should more than cover these costs, he added. The firm hopes to draw from its existing pool of clients on its commodities and currency trading platform who, Ashminov says, are likely to exceed the 10 deals a month commission threshold.
It's also important to note that some debit and credit card companies charge for depositing funds. The levy is in the range of 0. Trading 's new platform hosts stocks and shares, listed investment trust and ETFs. As a firm that is heavily reliant on technology, it is able to operate a lean business structure which allows for overheads to be kept at a minimum, Ashminov said. Finally, the platform will adopt a 'freemium' model - like mobile games that are free to download but have in app purchases - in the hope that some customers will shell out for additional services that it develops down the line.
Interestingly, Trading did not rule out the prospect of ending the free trade dealing initiative and introducing a base levy in the future. How does the platform stack-up against rivals? Cost and quality are two of the more pertinent considerations when it comes to choosing a DIY investing platform.
Other platforms offer a far more diverse range of investments than Trading 's proposition, the main difference being the ability to invest in funds. Investors are free to move DIY investing platform and should track down the one that is best for their needs. However, they need to be aware of fees for moving from their existing platform and from one they sign up to if they don't like it.
Investors should calculate the potential annual saving they would make by switching and a reasonable expectation of investment growth under the new platform against the cost of moving and any exit fees. Things like customer services offered by the respective platforms may seem like a small detail but can make the world of difference.
Trading is also a basic stripped back platform aimed at traders, whereas many DIY investing platforms carry tools, guides and best investment lists designed to help investors. Hargreaves Lansdown, for example, offers a proven popular service weighted towards funds but with access to investment trusts, ETFs, shares and the corporate bond market under one roof. If you trade more than 10 times per month share-dealing costs step down. Crucially, unlike many of its competitors, Trading 's platform does not offer tax efficient Isa or a self invested personal pension accounts- although these will come in the future according to Ashminov.
It offers a General Investment Account which is subject to income and capital gains tax based on based on individual tax circumstances. You can find a comprehensive round-up of different services and costs in This is Money's Best and cheapest investing platform round up.
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