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Low cost platform for US shares

Investment discussion for beginners. Why you should invest your money, get help getting started
grumpazoid
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Low cost platform for US shares

#418540

Postby grumpazoid » June 10th, 2021, 9:24 am

I have been searching on the internet for the last couple of days and found sites such as trading112 and capital.com

Anyone have any experience in using these for the purchase of US shares, particularly how they fair regards to fees.
I can see trading112 now charges 0.15% currency conversion but can see no such info for capital.com.


Any other recommendations?

grumpazoid
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Re: Low cost platform for US shares

#418652

Postby grumpazoid » June 10th, 2021, 3:50 pm

Well I just tried to sign up for trading212 but they are not accepting new accounts ATM.

Pah!

gryffron
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Re: Low cost platform for US shares

#418678

Postby gryffron » June 10th, 2021, 5:54 pm

Hi,
There has been a spate of "free" brokers. Generally their business model is to accumulate a load of customers and then sell them on to a bigger, and more expensive, competitor. Leaving you with a high cost account or all the hassle of moving.

Best low cost broker. iWeb or Halifax Sharedealing (same product with different branding). No platform fees. Low trading costs. Even cheaper if you use their regular "discount" batch trading. Been around for years. And yes, they trade US shares.

Gryff

GeoffF100
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Re: Low cost platform for US shares

#418719

Postby GeoffF100 » June 10th, 2021, 9:17 pm

iWeb/Halifax/Lloyds does not allow you to hold foreign currencies (you cannot do that in an ISA anyway). Their FX commissions are also expensive. Freetrade offers less expensive FX conversions, but is a recent start up.

paulnumbers
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Re: Low cost platform for US shares

#418730

Postby paulnumbers » June 10th, 2021, 10:16 pm

grumpazoid wrote:I have been searching on the internet for the last couple of days and found sites such as trading112 and capital.com

Anyone have any experience in using these for the purchase of US shares, particularly how they fair regards to fees.
I can see trading112 now charges 0.15% currency conversion but can see no such info for capital.com.


Any other recommendations?


The usual suspects,

Trading 212 0.15%

Freetrade 0.45%

IG Index 0.5%

Degiro 0.1%

Charles Schwabb 0%

HSBC Investdirect PLus 0%

wanderer
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Re: Low cost platform for US shares

#418754

Postby wanderer » June 11th, 2021, 1:25 am

I looked into this recently and concluded the best option in my case was to use my existing account with ii, and link it to a free HSBC USD current account. It means forex fees are largely eliminated (transfer to the HSBC account to get the USD conversion and then deal in USD with ii) and the ii dealing cost for US stocks isn't extortionate.

grumpazoid
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Re: Low cost platform for US shares

#418780

Postby grumpazoid » June 11th, 2021, 9:33 am

Thanks for all the replies.

I recently closed my Halifax sharedealing account as they are going to charge ongoing fees just to be on the platform.
Thanks for the heads up about FX charges on iweb etc.
I have also been looking at etoro but the number of shares they offer is pretty limited and excludes some of the ones I am interested in.
Also looked at fineco but lack of FCA is a bit of a worry. It does look like they will have to comply in the future though due to new rules after brexit.

@paulnumbers - thanks for that list....I will have a look at the ones I have not considered. I was put off by freetrade as it is app only and I like to use desktop.

@wanderer that is very interesting and I had already considered transferring funds with my credit card that does not have any FX fees. I do use ii already.
So do you transfer dollars across from HSBC to ii. Do they then sit on your account as dollars ready to be invested?

wanderer
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Re: Low cost platform for US shares

#418919

Postby wanderer » June 11th, 2021, 8:56 pm

grumpazoid wrote:
@wanderer that is very interesting and I had already considered transferring funds with my credit card that does not have any FX fees. I do use ii already.
So do you transfer dollars across from HSBC to ii. Do they then sit on your account as dollars ready to be invested?


I am still accumulating dollars in my HSBC account, so havent actually transferred them to ii yet, but yes, i understand that is how it works and you can have multiple currencies sat in your ii account. However, it turns out there is a flaw in the plan which is that a USD transfer out from HSBC to ii costs six dollars. So not quite as cost effective as i thought, although still better than normal forex charges when transferring larger sums.

As far as i understand it, you cant fund dollars into ii through a credit card, you can only transfer dollars from a dollar bank account.

Apparently you can use trade credits to pay the US dealing fees.... so that helps keep costs down a bit.... On reflection, its a lot of hoops though...

1nvest
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Re: Low cost platform for US shares

#418954

Postby 1nvest » June 12th, 2021, 12:22 am

So do you transfer dollars across from HSBC to ii. Do they then sit on your account as dollars ready to be invested?

I also use ii. Money (£) converted to US$ sits in the account as US$ thereafter, so when you place a buy or sell trade order just make sure you select the US$ cash choice from/to where the money flows when buying/selling US$ stocks. US$ dividends just add to the US$ cash amount, £ dividends add to the £ cash amount.

I guess if your linked external account(s) such as a HSBC account transferred $ into/out-of the account it would just add/deduct from the respective currency/cash within your ii account. AFAIK you can have multiple external accounts, so HSBC £, HSBC $ ...etc. or even a HSBC multiple currency single account. I believe however that for online transfers out i.e. to ii HSBC levy a $6 fee for online, more for via telephone. Not sure how much HSBC charge for currency conversion.

Basically I just covert currency once and pretty much leave that as-is, £x amount for trading UK stocks, $y amount for trading US stocks. Periodically if I think the £ looks high (low) I may convert some £ to $ or whatever.

I also have ISA and yet another account all merged/linked (takeover) into one, so just a matter of selecting which account and what currency when trading. A annoying factor is that you can't hold foreign currencies inside ISA, so buying US$ stock and US$ dividends paid (and selling shares) all involve conversion back to £ costs inside ISA. So more a case of UK stocks inside ISA, US stocks/currency outside of ISA (trading account) and use up yearly capital gains tax allowance against the US stock holdings.

I believe the 30 day rules still applies i.e. if you sell and buy back the same stock within 30 days then HMRC consider that as not having actually been sold. So if say MSFT holdings had risen from $40,000 to $50,000 value, sell the $50,000 but defer buying back again until after a month had passed (so uses up some of yearly capital gains tax allowance and lifts the cost-of-stock base from $40,000 to $50,000. Best to leave such tax harvesting until late in the financial year, just in case there's another factor, buyout/whatever that might induce a capital gain tax event that might occur during the fiscal year.

There's probably a more correct approach however I tend to record the £ value of trades as and when I make them, or the £/$ rate on the date that dividends were actually received ... for my self assessment declaration purposes.

1nvest
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Re: Low cost platform for US shares

#418956

Postby 1nvest » June 12th, 2021, 12:48 am

Tip: Use a pencil/paper for primary record keeping, logging when you converted £ to $ and at what rate ....etc. Use a computer as your secondary record keeping, perhaps even just scans of the paper records. From past experience computers can fail only to find that your backups don't restore either.

grumpazoid
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Re: Low cost platform for US shares

#419032

Postby grumpazoid » June 12th, 2021, 12:51 pm

1nvest wrote:

So more a case of UK stocks inside ISA, US stocks/currency outside of ISA (trading account) and use up yearly capital gains tax allowance against the US stock holdings.



Yes most of my portfolio is currently in an ISA using UK funds. I am looking just to dabble with low amounts with some US shares so the fees of the bigger providers look prohibitive at the moment. I may have to take a gamble with Fineco if I can find out what US shares are available with them. :shock:

gryffron
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Re: Low cost platform for US shares

#419069

Postby gryffron » June 12th, 2021, 4:35 pm

Bear in mind that you cannot hold USD currency in an ISA. And thus pay conversion charges for every transaction, including dividends. BUT you are also freed from reporting dividends and gains to the UK taxman. It loses a few quid, but it saves a lot of faff. Whether this is worth it depends on your personal attitude to time and money.

Gryff

seekingbalance
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Re: Low cost platform for US shares

#419146

Postby seekingbalance » June 13th, 2021, 12:25 am

I use the same method as 1nvest - I have an ii account in which I converted £s for $s in one large transaction, and I now buy and sell within the dollar section of the account. This means no conversion back to £s when I sell or fees to convert the £s again when i buy, which is what happens in my ISA.

Of course there is a currency risk here, so no cost averaging on the exchange rate over time, which could negate any savings especially if you don't trade much. Also, there is a fee just for having the account, but this is usually offset by a few buys and sells here and there, which can use the fees as credit, even if it is just reinvesting dividends.

When and if I ever decide to get back to £s there would be an exchange rate fee, again with that single point currency risk.

So, my suggestion would be that this is a good way to buy outside of an ISA, but only cost effective if you are trading a few times, it is probably not worth it for long term buy and hold of a very few shares.

I, too will check out some of the other options suggested.

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Re: Low cost platform for US shares

#419147

Postby seekingbalance » June 13th, 2021, 12:35 am

1nvest wrote:
I believe the 30 day rules still applies i.e. if you sell and buy back the same stock within 30 days then HMRC consider that as not having actually been sold. So if say MSFT holdings had risen from $40,000 to $50,000 value, sell the $50,000 but defer buying back again until after a month had passed (so uses up some of yearly capital gains tax allowance and lifts the cost-of-stock base from $40,000 to $50,000.


Yes, the rules are the UK rules, wherever you hold the shares.

What I do, as I am hopeless at trading and timing the market, is either sell and buy something else that is correlated (sell MSFT, buy Apple for example, then trade back after a month), or do the same with a fund (the few you can buy these days due to UCITS rules) or I'll buy a correlated ETF in my UK ISA or SIPP - no stamp duty. I find EQQQ is usually not a million miles away from the same performance of most of the types of US shares I buy, which are mainly the FAANGs and similar, over a single month. It's never perfect, but I'm usually better off with the CGT wash than any gain or loss I make on the 30 day variance.

This is of course if I want to complete a round robin - what I also do is reposition my portfolio so don't actually buy back. IN that case (using MSFT as the example again) I'd sell MSFT and buy whatever other new US share I like better, and just buy the same amount of MSFT in my ISA or SIPP and just hold. This works quite well for dividend paying shares as it removes the nonsense of all the accounting for them, and even better in the SIPP you also save the withholding tax.

1nvest
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Re: Low cost platform for US shares

#419154

Postby 1nvest » June 13th, 2021, 1:21 am

Tax harvesting is more awkward to describe than do. Maybe selling some holdings that are down relative to cost to add those losses along with CGT allowance to up the cost-per-share of a winning stock/holding. And draw income at the same time ...etc. For funds sitting idle for the 30 day wash-rule to pass another option might be to buy a index tracker as a 'fill in' holding. Personally I'm very lazy in that respect, do tax harvesting relatively infrequently and more inclined to just leave 30 day waiting funds in cash. Not good practice but generally washes i.e. sometimes buys back more, sometimes less according to whether stocks generally rose or declined over that month. Or some cash might be moved into other accounts such as my regular spending bank account (debit card) or into other family members accounts (for them to load up their yearly ISA/whatever) where conceptually they could immediately buy the same stock within their account.

grumpazoid
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Re: Low cost platform for US shares

#419402

Postby grumpazoid » June 14th, 2021, 9:49 am

Another one to add to the list that looks promising is Stake.
FX fee is 0.5% both in and out but that appears to be the only charge so looks reasonable as some other platforms charge for every trade.
It is also useable on desktop I believe.


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