Why would I want to know how to buy shares without a broker?
If you a looking for how to buy shares without a broker, we must firstly consider what a broker does and whether we should be without one in the first place.
A traditional stock broker is exactly what you would expect them to be, just like in the movies, they are well dressed individuals who help you facilitate buying and selling of stocks and other securities. Albeit with a loosening of the dress code in recent years the fiction is still not too far from the reality.
Now we are not saying that all brokers are like Jordan Belfort or Gordon Gecko but they do not always have the best reputations, somewhat unfairly.
A broker is essentially a middle man that charge a commission for their services and expertise, the decision you have to make is, “is that a service I am prepared to pay for and need?”.
Who still uses Stock Brokers to buy shares?
Stock Brokers generally work with high net worth clients who are able to pay for this more personalised service. Also those that would like exposure to the growth of the stock market but without having to take the responsibility or time to learn what they need to, could definitely go for the convenience of having this all with a managed trading service.
A broker will generally provide a lot more than the ordering and selling of stocks on your behalf, depending on whether they are an ‘execution only’ service or a ‘full service broker’. You would expect a full service broker to be able to guide you on when to buy and sell stocks in your portfolio, or if acting on a discretionary basis they will just execute the trades based on some pre-agreed terms. If your broker has a track record of far outperforming the average market growth over a given period then they could very well be money well spent.
There are other types of advisors that could fit into this definition for the purpose of this article such as financial advisors or retirement planners as they will often be enacting stock purchases on your behalf as part of your agreed growth plan.
All of the above will usually provide a comprehensive financial service that will look at your financial portfolio in detail and assess your risk tolerance based on your lifestyle and future plans. Their expertise and guidance can be invaluable to some inexperienced investors, but others may deem this as an unnecessary expense and would favour other ways of trading stocks without the use of a broker.
The most common way how to buy shares without a broker?
One of the easiest and most popular ways to cut out the middle man is by using an online trading platform or online discount broker.
If you are looking to buy one or two shares based on a personal interest, a broker is not going to really add any value for you and without generalising, self selecting will likely be a good option.
Online stock brokers usually do not offer much in the way of investment or financial advice at all and are essentially an online shop to buy and sell shares. Since they do not have a traditional physical office for prospective clients to visit and speak to an actual broker, their online business has considerably less overheads and can charge less commission, thus attracting clients with a smaller financial portfolio.
Some online brokers do have local offices if you need support but it is not like the traditional picture of a bank style consultation they would offer. You can therefore save a lot of money on 3rd party commissions and thus increase overall profits but you do so at the loss of a professional ear from which to get recommendations.
So know we know how to buy shares without a broker in principle, what are some reasons you might want to?
Why would you want to buy shares without using a broker?
Since the advancements of the internet, there are now many other ways to trade shares than by going through the more old fashioned style of broker or financial adviser.
Buying shares without a broker could save on fees
Traditional brokerage fees would usually be in the form of an annual percentage of all assets under control. Over time, this particular model of fees has the ability to seriously eat into your gains and without giving any more guarantees that you will outperform ‘the market’.
Online trading platforms actually charge far less commission than the traditional stock broker which are in most cases limited to a simple transaction fee for the buy order and another for the sell order. These transaction fees can range from $/£/€10 each way or you could opt to trade with 0 fees with certain brokers that have started to offer this service. Platforms operating this type of model usually make their money in the small differences between each buy/sell price.
If you are buying shares into your pension portfolio or ‘Super’ in Australia then it is usually advisable to go via the more traditional route as the goals and recommendations, alongside tax efficient options are much better coming from professional support.
If you want to action your trade quickly or out of hours, it could be better to buy shares without using a broker
When time is of importance, you may not want to go through a lengthy consultation process to open an account with a broker. Also the speed of transaction will be faster if you remove one cog in the process.
If you are self selecting shares and know what you are looking to buy, you may not have a need for a broker at all and in fact by executing the trades yourself online or via your app, you can act quicker or make out of hours trades on certain stock markets and trading platforms that support this. IG Markets provide weekend trading on the main indices which allow you to take advantage of overall index moves even during closed periods.
One of the most important aspects of buying shares is getting in at the right price and being able to act quickly can help you in that respect especially during volatile market conditions.
Keeping tighter control or your portfolio, and of your information, could be a reason to buy shares without the use of a broker
Another advantage to using an online broker is having complete control over all your investment decisions without outside input. A novice trader may find this type of no frills, unguided stock trading difficult to get to grips with initially but the rewards could prove fruitful if the right decisions are made.
There are also certain people that would like to keep their personal information and their portfolio within a tighter circle and may not feel as comfortable as others in disclosing everything to a third party who is an unknown quantity.
Trust, especially when it comes down your finances, can be a hard thing to give away so if you feel you are more discreet and would be happy to make your own decisions on when to buy and sell your shares, trading with an online broker could be the way to go.
Flexibility and portability, being able to buy shares without a broker on your commute or whilst on vacation is a benefit
Many online trading platforms come in desktop versions, or the now very trendy version of an app. This has a great improvement in user-experience, transparency over your portfolio at all times and portability.
The time it takes for a stock buying or selling decision to be made and then communicated to your stock broker could cost thousands since the stock market can fluctuate so drastically within a matter of minutes. During stock market crashes, having your portfolio to hand immediately wherever you are to execute your trades is a really valuable commodity.
You would hope in cases such as this that your broker (should you be using one) would still be able to execute your wishes but for those that like to be personally responsible and liable for their own funds would be well served with an app that has a lot more functionality at the tip of your fingers.
Buying shares Without a Broker in the UK
If you are interested in buying UK shares you will find a good array of LSE and FTSE listed companies on each of the broker or trading platforms provided below. We have separated these out depending on the intended purpose of your stock purchase. Now you know how to buy shares without a broker let’s look at the different online platforms that can help you.
Best For Buying shares in UK With No Fees – eToro
Best For Buying stocks & Shares ISAs – Interactive Investor
Best For Buying widest range of UK shares & out of hours trading – IG
Buying shares Without a Broker in Australia
If you are looking to buy ASX listed shares, you will need a online platform that has a decent array of options and that means usually you need local brands that may be already familiar. There are some global brokers that have made a push into Australia in the past years that have been able to reduce the costs down to $0 but there will be a more limited range of companies you can invest in so do check out which companies or sector you are considering is supported beforehand.
The good thing about online platforms is that you can open a demo account within about 60 seconds with most and check out the range of instruments they have available before you fully complete your profile.
Best For Buying Shares in Australia With no commissions – eToro
Best for wider ASX stock options – IG
Best for Shares CFD trading Australia – Plus500
Buying Shares Without a broker in Singapore, Malaysia, Hong Kong or China
If you are planning to buy shares on one of the major South East Asian exchanges such as The Stock Exchange of Hong Kong, the Singapore Exchange, Nikkei, Bursa Malaysia or the Shanghai Stock Exchange you will need to find a platform that has support for the companies you are interested in.
There are a few global options that provide access to these markets but largely, if you are looking to buy into smaller cap companies you will struggle unless you find a local option. We include a couple of options that provide access to the larger exchanges and options.
Best broker for trading Asian exchanges with no commissions – eToro
Best for shares CFD options – Plus500
Best range of indexes provided – IG