With interest rates on savings accounts in Ireland so low , some people will be looking at alternative investment options for some of their money.
Buying stocks and shares is one method of potentially making a good return from an increase in share value and also from dividends.
After sharp falls in March there has been some good recovery of some share prices in April and May. We have seen large numbers of people searching for ” How to buy shares in Ireland” since the stock markets fell
When people observed the huge share price rises in recent years of some companies like Tesla , Amazon, Google, Facebook and Apple – it’s no wonder they wanted to try and make some money from shares. In the USA a share trading app called Robinhood has become very popular with novice investors – but it is not available in Europe .
Investing in stocks and shares involves risk of loss, they can fall in value as well as rise
We do not recommend anyone should invest money that they cannot afford to lose. If you want to guarantee that you will not lose any of your money, then the stock market is probably not for you . The recent sharp fall in world stock markets caused by the Coronavirus scare is an example of the risk of loss.
After a stock market crash , as happened at the start of coronavirus, could be a good time to buy shares. You have a chance to take advantage of the lower share prices or look for companies that will do well in the current situation. Some of the best shares to think about buying during coronavirus would be companies involved heavily with tech, online, deliveries, Biotech etc. But of course – there is still the chance of prices falling again.
New customer numbers were so high in March and April at some popular online stockbrokers, that they had to put new registrations on a waiting list. Degiro was one, but as of July 12th they no longer have a waiting list.
Stocks and Shares
A share is a small part of a company that you can buy for a set price. When you buy shares in companies like Amazon , Alphabet (Google) , Ryanair or Tesla , you become a shareholder in that company.
A person can also own shares of several kinds of financial instruments: such as investment trusts, mutual funds and exchange-traded funds(ETFs)
Stock is the generic term for shares , and the Stock Market is made up of the various exchanges where shares are bought and sold by stockbrokers. The London Stock Exchange, New York Stock Exchange etc.
Share prices can move up or down in value, depending on the performance of the stock market, the current profitability of the company and the expected future profitability or potential of the company.
Cheapest Way to Buy Shares Online in Ireland
The cheapest and easiest way to buy stocks and shares in Ireland is to have an online “execution-only” account with a stockbroker. That means you can buy or sell shares or ETFs that you chose yourself without getting any advice from a broker.
You can buy shares with fees as low as 50c in some cases.
Listed below is a comparison of the share trading fees at some online stock brokers that operate in Ireland.
We have compared fees charged by DEGIRO, Interactive Brokers, Davy Select and Goodbody Online.
The fees shown are for buying or selling shares / ETFs. The figures were checked in June 2020 .We did not include stamp duty in the comparison because it is the same for all providers . (More about ETFs here)
In our comparison of online share dealing and portfolio management costs – DEGIRO came out as the cheapest.
In one example they were 78 times cheaper than the most expensive alternative.
Share Dealing Charges Compared
|Buy €1000 of Irish shares |
each month for a year
|Buy €10,000 worth of |
US shares @ $10 each
and keep for 5 years.
|Buy €5000 of UK |
shares and keep
for 2 years then
|Buy €1,000 of Euro|
ETFs each month
for 5 years
Review of Online Share Dealing Fees in Ireland
Dutch firm DEGIRO launched its online stock brokerage services in 2013.
DEGIRO now operates in 18 European countries – including Ireland. the Investors Chronicle / Financial Times voted DEGIRO the Best Low-cost Stockbroker in 2017 and 2018 .
Degiro is regulated in the Netherlands and it uses EU passporting rules to allow it to operate across the single market.
Fees at DEGIRO
- Irish shares : €2 + 0.05% per trade
- UK / European shares: €4 +0.05% per trade capped at a maximum of €60
- US shares : €0.50 per trade + (USD 0.004 per share)
- ETFs some free otherwise €2 plus 0.03%
- Annual fees – DEGIRO has an annual fee you for connecting you to exchanges. This fee is currently €2.50 per exchange per year but there is no fee for the Irish exchange for Irish residents.
- Foreign exchange fees – Manual = €10 plus 0.02% OR auto = 0.1%
If you bought 1000 US shares and kept them for 5 years , DEGIRO would charge you a total of just €13.30 . See the table above to see more examples of DEGIRO charges compared with Interactive Brokers and other online stockbrokers.
You can sign up to DEGIRO here.
NEW – June 2020 – Degiro is partnering with Flatex Bank to hold client’s uninvested cash. Flatex bank is guaranteed by the German Deposit Guarantee Scheme. So all client’s cash up to €100,000, will be covered.
Interactive Brokers is a worldwide company and Irish residents will deal with the UK branch, Interactive Brokers U.K. Limited. They are authorised and regulated by the Financial Conduct Authority in London.
Online Fees at Interactive Brokers
- US shares $0.005 per share
- Irish shares not available to buy.
- UK Shares £6 per order up to £50k
- Euro Shares 0.1% , Min €4 max €29
- Maintenance Fees : Minimum commission of $10 every month. (This fee is waived if you have over $100k in portfolio
If you bought 1000 US shares @$10 each and kept them for 5 years, Interactive Brokers would charge you €595 in maintenance fees and €5 in commission- a total of €600 .
Compared with DeGiro – Interactive Brokers is about €520 more expensive.
Davy stockbrokers is based in Dublin , was established in 1926 and is regulated by the Central Bank of Ireland. They manage €14bn+ of client assets, with offices in Dublin, Cork, Galway, Belfast, London and Luxembourg. Minimum investment €500.
Online Fees at Davy :
- Trading fees of 0.5% – Minimum €14.99.
- €25 Foreign Transaction Settlement Charge per trade for each trade of shares listed outside Ireland and UK .
- Foreign exchange fees max 1%.
- Minimum Fee per trade for shares listed outside Ireland and UK 0.06%.
- Execution Service Fee of €50 per quarter less any commissions paid that quarter.
If you bought €10,000 worth of US shares with Davy Select ,and kept them for 5 years, Davy would charge you €75 in commission and €950 in execution service fees: a total of €1025 . Compared with DeGiro – Davy online is €1010 more expensive.
See the table above to see more examples of how Davy compares to Degiro
Signup at Davy Select here
The firm Goodbody has been involved in the Dubin Stock Exchange since 1874. Goodbody Stockbrokers was acquired by Fexco in 2011 and they are regulated by the Central Bank of Ireland .You need to deposit a minimum of €5000 to open an online trading account with Goodbody.
Online Fees at Goodbody
- Charge of 1% on the first €25k of a transaction – then 0.5%. ( Minimum fee €25.)
- Also – a charge of €25 is made on all US and European trades.
- Plus Maintenance Fee €100 year plus VAT
- Foreign exchange fees – up to 1.25%
If you bought €10,000 worth of US shares and kept them for 5 years- Goodbody would charge you €615 in maintenance fees and €125 in commission. a total of €740.
See the table above to see more examples of Goodbody fees compared with Degiro .
Sign up at Goodbody here
ETFs (Exchange Traded Funds)
ETFs are a good method of investing in a wider portfolio of shares. All the stockbrokers listed above will allow you to buy and sell various ETFs as well as shares in single companies.
Read more about Buying ETF Funds here.
Stamp duty on Shares
Stamp duty is chargeable on the purchase of all Irish and UK shares. The rates are: 1% on Irish Shares and 0.5% on UK shares. This will be the same for all brokers.
Taxation of Shares
Capital Gains Tax (CGT) – if you make a gain on a share trade, the state is going to be looking for 33% of it as Capital Gains Tax . This is the same rate as the DIRT tax on deposit accounts. But – with CGT the first €1,270 of taxable gains in a tax year are exempt. There is no tax free exemptions with DIRT on deposits.
Taxation of Share Dividends
If your shareholding gets paid a dividend, Revenue is going to look for some of that too in the form of Income tax.
PRSI and USC may also be due on the gross dividend and will be collected through the Self Assessment system (if applicable)
Taxation of Dividends paid by Irish companies
Irish companies will always deduct 20% tax at source from the gross dividend. If you are liable for income tax at a higher rate you will pay tax on the gross dividend at the higher tax rate and be given a credit for the 20% tax already deducted.
Taxation of Dividends on UK shares
You will be liable for Irish income tax on the net dividend received by you. No credit is allowed for any UK tax already deducted from the dividend payment. You must convert the net payment received to Euros and declare it on your Irish tax return form.
Taxation of Dividends on US Shares
There is a 30% withholding tax on US dividends for non-US residents. If you complete a W8-Ben form for your stockbroker, a lower 15% tax rate will then apply. You need to declare the dividend income on your Irish tax return and you will be liable for either 5 per cent or 25 per cent of the dividend in additional tax. (Depending on whether you pay income tax at 20% or 40%)