Paper share certificates are slightly more difficult to sort out and will probably cost more, but if you approach a platform it will probably be able to help you value them and help with the administration.
Take some time to look around the platform’s website and look at the information it provides before you sign up, it could save you time and money in the long run. Even the most experienced investors will benefit from share tips and helpdesk support, while everyone will want an easy-to-use website. For example, a simple search will show that if you buy Marks & Spencer shares through a platform such as Hargreaves Lansdown, you’ll be sent vouchers offering discounts across the Marks & Spencer product ranges.
While investments should be chosen for their potential to hopefully make you some money, shareholder perks can be a welcome bonus. Stamp duty: When purchasing UK shares expect to pay 0.5% stamp duty and an extra £1 on transactions above £10,000. Buying/selling shares: The fee you pay each time you buy or sell shares.
Account fee: Platforms may charge a monthly, quarterly or annual account fee, but in some cases this is waived if you make a minimum number of trades, or your account is of a certain size. Most platforms will allow you to do this at no cost, you’ll just have to fill in a form and it will take a few days to convert them to online shares. Trading in paper shares is a more expensive and cumbersome option.
Before things moved online, all shares were traded through paper certificates. Then there’s the Alternative Investment Market (AIM), which lists smaller developing companies that you may not have heard of. There’s the main stock exchange – the London Stock Exchange, where you get a whole host of companies including the really big players such as Marks & Spencer.
The easiest and cheapest way to buy shares is online from what’s called a ‘share dealing platform’. If you’re contacted out of the blue by someone inviting you to invest in shares, say ‘no’. There are two ways you make money from investing.
If you have more than £20,000 to invest, you can put the first £20,000 into an ISA and then use a standalone dealing account for the rest. If you’re new to investing an ISA should be your preferred route for the first £20,000 (the current ISA limit). So, rather than just getting 1,000 shares for your £10,000, two payments of £5,000 buys you 1,026 shares.
But if the share price went down to £9.50 in the second month, you’d be able to buy 526 shares, as the shares are at a lower price. If you bought £5,000 worth of the same shares per month over two months (amounting to £10,000 overall), you’d buy 500 shares in the first month. By pulling out of the market as soon as a share dips or trying to second-guess when a share will reach its peak, you could lose out on sharp recoveries or see the price go down again.