09:04 24 January 2013
One of the major concerns of investors when they trade stocks and sharesis the trading fee. Most of these people know that in order to reduce the risk of losing their investment, they need to diversify their portfolio.
Meaning, they need to buy several stocks from different companies instead of choosing just 1 to 5. However, the cost of diversifying their funds can be costly.
Here is an example. If you have £10,000 to invest and you decided to buy shares in 20 companies, the dealing cost may be as much as £240 (if the dealing cost is £12 per trade).
This means that you automatically lose 2.4per cent of your investment. Aside from that, you’ll also be charged for stamp duty just to construct your portfolio.
The easiest way to keep your trading costs down is to through aggregated orders.
This means buying shares with other clients in the same stock on specified day each week or each month.
This gives the share dealing providers less work to do thus, they charge a bit less. The savings is passed on to investors like you.
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