Which are the cheapest / best UK brokers for stocks?

There is a wide range of online share dealers out there, and deciding which to opt for to buy, manage, and sell your funds, shares, investment trusts and ETFs at a cheap price is not easy.

Amongst the leading online brokers are Hargreaves Lansdown, AJ Bell YouInvest, The Share Centre, iWeb, Interactive Investor and Bestinvest.

Here's an excellent at-a-glance cost comparison of the UK's main discount brokers and fund platforms here by Monevator. It's also worth reading this overview piece in This Is Money. These service are online and execution-only. i.e they are not suitable for investors seeking financial advice.

How about international equities?

We have written about international share dealing and charges, here and here.

For UK investors looking to trade foreign equities, the International Investor blog (http://the-international-investor.com) provides an excellent analysis of the options available. As it notes, four key players in this space are as follows:

  • TD Direct Investing is a popular choice for international stocks. It offers a good range of major markets for online stock trading in Europe, North America and Asia at low rates, but it carries an unattractive 2% charge on currency conversions - it does however have a Luxembourg division called Internaxx which is worth looking at.
  • Barclays Stockbrokers offers a wide range of markets with lower currency commission, but apparently also less flexibility than TD Direct on holding foreign currency.
  • Interactive Brokers is a deep discount US service which also has good coverage of Asia and takes almost no commission on FX conversions (0.01%).
  • Saxo Bank is an online Danish investment bank but very active in the UK. It is unsurprisingly strong in the Nordic markets, but has broad international coverage (including major Asian exchanges and unusually also includes Poland and South Africa).

If you're looking to hold foreign stocks in an ISA, iDealing and Sippdeal are said to be the most cost-effective solution for this.

How do I minimise FX costs for international equities?

Investors usually scrutinise a stock broker's trading commissions, but fail to factor in other costs. That's unfortunate as you can end up paying a great deal more than trading fees when you're investing in foreign shares. One of the best hidden costs are FX conversion costs, i.e. how much it costs you to buy foreign currency when your broker settles a foreign trade. As this link notes, there are ways you can minimise these charges, for example by paying in funds in foreign currency using a currency specialist.