Dealing Costs

For buying or selling ordinary shares on the Stock Exchange you have to use the services of a stockbroker. You may either instruct a stockbroker direct, or you can ask your bank or your solicitor to handle the transaction for you, in which case the bank's or solicitor's own stockbroker will act. The following gives an idea of what the costs are likely to be:

Transfer stamp. A government tax of 2% of the contract price has to be paid by the buyer, but not by the seller.

Contract stamp. A contract stamp has to be affixed to the copy of the contract note that is sent both to the buyer and the seller. These are the rates of stamp duty:

bargains of £100 or less free

bargains from £100 to £500 lop

£500 to £1,500 30p

over £1,500 60p

Brokerage. The official minimum scale of stockbroking commission, payable by both buyer and seller, is:

£200 or less at discretion of broker

£200 to £467 £7

£467 to £7,000 1.5% of total bargain

£7,000 to £100,000 1.5% on first £7000, plus

0.5% on remainder

Commission on larger amounts is at a reducing rate.


Long-term Investments

if it were to be adjusted for inflation, should be divided by 3.3, making it around 75. This indicates that people who have held shares since 1970 have, on average, lost half the value of their capital in real terms.

240 Average annual level of

Financial Times 500 All-share Index

220 F . (April 1962 = 100)

200

180

160

14()

120

100

80

Average annual level of Retail Price Index (January 1974 = 100)

60

1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 2000Long-term Investments


Personal And Business Finance 2018

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