How To Get Started Investing

Not long ago it was common practice to call your stockbroker for his clairvoyance on markets and company performances. The truth is, whether associated with one of the big banks or a brokerage firm, that advice is pricey and never at the expense of the firm's other interests and relationships with the companies they recommend. The bundling of risky mortgage-backed securities that would be sold off as safe investments, and precipitated the Great Recession of 2007-2009, is a case in point.

This experience in particular has facilitated the rapid rise in online investing through an execution-only type of broker so people can take control of their own investments. With increasing competition between these execution-only brokerage firms, fees have come down drastically in recent years so it's fair to demand more than you ever could from your online broker. Typically, you want your account to be free of charge, tradings fees to be cheap (they will most definitely come down to zero in the near future), be easy to navigate and preferably also able to handle different currencies. DEGIRO has very competitive trading costs and is easy to navigate. Interactive Brokers has similarly low fees but caters more towards professional traders so is more difficult to navigate. New brokers are constantly coming on the scene. What is important to note about DEGIRO is that while trading costs are low, transferring your stocks in or out of the portfolio costs between £18 (EU) - £78 (US) per position, which is more manageable if you only have index funds but is something to be aware of.

It must be noted that you should first take advantage of your annual £20,000 ISA and pension allowance, which is tax free and can be used to invest into the stock market as well. DEGIRO does not provide ISA trading accounts but brokers like Vanguard and Trading212 do, yet the former will charge you ~0.15% on your entire balance in fees annually.

Once you have followed the steps to open your account, whichever broker you have chosen, you can transfer the money that you want to invest into the account and start following your chosen investment strategy.

As trading fees still exist in European brokerage accounts (these have recently been abolished in the US), as a rule of thumb, you never want to pay more than 1% of your invested capital towards these fees. So, if your trading fees amount to £1, you want to be investing at least £100. If your trading fees are £10, you should be investing at least £1000. Until trading fees are abandoned, it is worth keeping in mind, as fees can add up over time.