Online share dealing returns

The annual average return per £1 spent

By BBC business reporter Max Foster

The online share dealing market in Europe is continuing to grow - despite the collapse in technology company share prices since the early part of 2000.

That fall in share values succeeded in dampening the soar-away popularity of online share dealing.

Online share: £1.12 return beats horseracing income

But such was the boom in the early months of the year that the number of people buying and selling shares online doubled to 1.36 million during 2000, according to a report by investment bank JP Morgan.

The number of online share traders in the UK is reported to have quadrupled to 280,000 during the course of the year - with the number expected to reach the 2 million mark by the end of 2002.

The majority of the growth has come from existing shareholders moving online and are typically people trading from home on their personal computers via stockbroking websites.

But does a gamble pay off?

The idea of course is to make as much money as possible.

But that is something which can be quite problematic, given the volatility of shares.

The internet has changed all that in the last two years - all the information is out there on hundreds of websites so that anybody can find it. That gives a great advantage to the amateur investor

Prof Fitt

Indeed it can prove to be as much of a gamble as betting on a horse race.

But according to Southampton University's maths department, it is a gamble that usually pays off.

"It is no longer a question of can I afford to trade online, but rather can I afford not to?" says Professor Alistair Fitt from the university.

For every £1 spent on shares online, investors should get an average annual return of £1.12 back in the long term.

Continued web growth

By contrast the average person who gambles on horse racing comes away with 88p, those who dabble with fruit machines 85p and with roulette, 97p.

The worst return amongst the categories included in the study was just 50p for every £1 spent - for regular National Lottery players.

"A few years ago no amateur investor really had access to the information they needed," explained Prof Fitt.

"The internet has changed all that in the last two years - all the information is out there on hundreds of websites so that anybody can find it. That gives a great advantage to the amateur investor."

Despite all the tech doom and gloom, more than a quarter of direct share trades are now done on the internet as opposed to trading rooms.

It seems that share trading online is one part of the web that continues to be a success.