It isnt every day you get offered something for free, so investors will belooking very closely at the new free share dealing service from Vodafone (LSE: VOD). There is always a catch when a large businessbrandishes that four-letter word, but in the case of the Vodafone Share Account there are tangible benefits as well, at least for small investors.
FreeFor Those With 50 Shares
Vodafone is sending an information pack to around 400,000private investors and employees in the UK and Ireland who hold1,000 or fewer of its shares, explaining how they can either sell their holdings or buy moreif they prefer. Many will have ended up with such tiny holdings because they held stock in companies that Vodafone took over. The telecoms giantwould like to tidy them offits register, to spare itself the effort of sendingdividend notifications, statements and invitations to annual meetings. Well, we all relisha bit of spring cleaning at this time of year.
The freepart of the deal will only apply to thoseholding 50 shares or less, whocan use the service to offloadthem at no cost. With Vodafone trading at around 210p, this will only apply to those holding shares to a total value of just over100. Given that investors who hold paper-based share certificates could face minimum dealing charges ranging from 30 to 60 for a one-off trade, which wouldswallow most of a 100 holding and probably involve an effortful trip to the local high street bank, the deal is a decentone.
Everybody Else Pays Up To30
The Vodafone Share Account isnt freefor everybody though. Those sellingbetween 51 and 1,000 shares will pay 15p per share, subject to a maximum transaction charge of 30, plus 0.5% stamp duty. Shareholders with paper certificates will pay 25p a share, again subject to amaximum 30. This could still swallow a hefty percentage of the returns forsomebody with, say, 60 shares.
Alternatively, small shareholders can choose to sell their entire holding and donate the proceeds to charity via ShareGift instead, at no extra cost.
You Can Buy Too
Ifyou reckon Vodafone isa good investment right now, you can also buy more shares through the account. You can buy shares worth between 1,000 and 10,000 for a single transaction fee of 30, plus stamp duty. This is a bit pricey, given that you can trade for 10 on a host of sites (including the Fools), but comparisons are unfair because for most itwill beaone-off trade. The Vodafone Share Account is not open to those who bought theirshares through an online stockbroker and therefore hold them in a nominee account.
My concern is that somebody who doesnt own any other shares would be crazy to invest thousands of pounds in a single company stock. Although IpersonallyrateVodafone as a buy right now, youshould only buy individual company stocks as part of a balanced portfolio. It would be far wiser to spread smaller sumsbetween four or fivedifferent companiesinstead. Otherwise you risk losing a lot more than 30.
Harvey Jones has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.