Getting started with trading platforms
If you’re like me and you’ve managed to work hard and put a little money aside you’re probably thinking that there are much better uses for it than sticking it in a bank account with an appalling interest rate. My own bank is currently paying out the handsome amount of 0.25% interest on savings, which isn’t even enough to keep up with inflation. If you think about it like that then you’ll soon realise that keeping your savings in a bank is actually losing you money.
So one alternative is to convert your cash into another form of value, and the stock market provides the perfect opportunity. As a retail investor, you can achieve this easily by choosing an online trading platform and buying some investments via the platform. But how do you do it?
Research, Research, Research
Your best friend in choosing which platform to use is Google. There are hundreds of user reviews on the web from real people describing their individual experiences with the various platforms that are available. Each platform provides broadly the same services but for full transparency, I’ll tell you that after much research I ended up choosing Hargreaves Lansdown as my trading platform. They’re not the cheapest but they have a really excellent website full of useful information about the daily news in the stock trading world, as well as independent research on the many companies that you can own shares of. They also the supply the latest values of the main global markets, currency prices and commodity prices and to cap it off they have a fantastic mobile app which allows you to trade on the go.
To begin, you’ll need to register with the site and provide them with some basic private information such as your address and date of birth, after which you’ll be able to select a username and password for your new account. Before you can buy any investments on your new trading platform you’ll have to link your bank account with your trading account which is actually a simple process and can be done either online or over the phone.
But don’t worry, the large trading platforms are completely safe and it’s highly unlikely you’d ever get your private details stolen. However, as always, keep your password secure and try not to enter your details over public wi-fi areas such as coffee shops. Luckily, if you have any questions there are support teams to help you, and another reason I opted for Hargreaves Lansdown is their excellent telephone service and I’ve never had to wait for more than 30 seconds before someone from support has answered.
The reason you’re linking your bank account to your trading account is that you have to have sufficient funds in your trading account to be able to buy investments. The money doesn’t come directly from your bank account when you purchase shares (or any other investment). You first transfer money from your bank into the trading account, and it sits there until you’re ready to put it into whatever investment has taken your fancy. You have the option of opening a SIPP (Self Invested Personal Pension), ISA (Individual Savings Account) or a standard trading account, but it’s highly recommended that you take advantage of the tax-advantaged wrappers of SIPPS and ISAs to make your investments.
Setting up your trading account is actually quite simple and shouldn’t take more than an hour of research and website button clicks. The difficulty comes from knowing which of the thousands of choices between stocks and funds you should move your hard-earned money into.
Whilst this topic will be covered in other articles on the FinanceFanatics site, I will say here and now that you absolutely should not do anything until you’ve spent a good amount of time researching the world of shares, funds and internet trading before you even think about clicking that buy button. So before you jump in I would seriously recommend that you conduct some thorough research not only on which sector of an industry you want to invest in, but also in which companies within that sector you believe will provide a decent return on your capital investment. The subject of fundamental analysis will be covered in a future article so keep watching the site!
It’s at this point you might want to become familiar with the subjects of Technical and Fundamental analysis, both of which will be covered in a future article, so keep watching the site for updates!