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How to Buy Shares In UK. Beginners Guide to Buy Shares Online 2020

If you have some cash laying around that you want to make use of, then maybe you should consider investing in shares in the United Kingdom. The process in the modern day is very simple and instant. This guide will go over how you can buy and invest your money into shares in the United Kingdom. So, let’s get into it.

In This Article:

What are Shares?

Shares refer to the units into which a businesses’ capital is divided. If you own a share in a business then it is a measurement of a unit of ownership in a business, asset, etc… that allows you to claim a portion of the businesses’ profits throughout the year. In a best-case scenario, shares are issued by a business that is trying to raise money from the general public. By going out of your way to purchase these shares, you will also be obtaining a percentage of ownership within the company.

What is a Share price?

A share price is in reference to the value that is put alongside to a single company share.  This is usually representative of the lowest possible amount of money that a company is willing to allow a share to be sold for in the stock market.

Can I Purchase Shares Online in the United Kingdom?

Of course you can, you usually have two primary options when it comes to having ways of purchasing shares online in the United Kingdom. The first and most popular of the two is to buy shares from a brokerage online who presents you with a digital share certificate representing how many shares you bought and now own as a result.

To be able to get access to company shares you’ll have to make an investment account through your brokerage, then proceed to put funds into the account and then purchase the shares.

The second option you have is you can have the option to purchase Share CFDs online. The process of buying these is similar to the process we previously mentioned.

Can I Sell Shares Online in the UK?

Of course you can sell shares in the United Kingdom also. If you are choosing to sell CFDs it is much easier though. You do not have to ensure that you have notified your broker beforehand about your decision to close or open a position. You in essence have a lot more control over your investments and the process that you take through them.

How To Buy Shares In 3 Easy Steps

Don’t have time to read our guide in full? If so, follow the 3 steps outlined below to get your hands on some UK shares in a matter on minutes.

1. Select Broker

You’ll want to choose a broker that gives you access to shares listed on the London Stock Exchange.

2. Deposit Funds

Deposit funds in a matter of seconds. Choose from a debit/credit card, e-wallet, or bank wire.

3. Buy Shares

Search for Shares, specify the number of shares you want to purchase, and click ‘buy’.

How to Buy Shares In a Company

To get started you need to think about how you want to get started in getting a hold of United Kingdom shares. Below we have listed some ways:

  • Online Broker: This is the easiest and safest way to acquire UK shares. All you have to do is open and verify your account, deposit some funds and then choose yourself which shares you want to invest in.
  • Traditional Stockbrokers: This are becoming less and less popular, but traditional stock brokerages grant you the ability to buy UK shares over the phone. You still have to open and verify an account with the brokerage, these are now seen as less convenient and are becoming more and more costly also.
  • Mutual Fund: This is a good route to consider if you want your managed to be managed by someone else on your behalf.
  • CFD Broker: This is the best route if you are only planning on selling and purchasing for a short period of time.

No matter what one you choose, you must always ensure that the platform you have chosen is regulated by the FCA and holds a tier one license, if not, do not get involved with them.

Step 1: Select a Platform to Buy Shares

With that being said, there’s are literally hundreds of FCA regulated brokers active in the online space, so you’ll need to spend some time finding a platform that meets your needs. To help you along the way, below we have listed three of the best online brokers that allow you to buy shares.

The best option we feel is online brokers despite the number of options that you can choose from. This is because of the cost, convenience and support available through conducting your purchases through online brokers. There is plenty to choose from. Some of these include brokers such a eToro, Plus500 and BDSwiss just for a number of examples.

eToro

Highlights   An ideal trading platform for both beginners and experienced traders! With over 8 million users eToro is one of the largest social trading platforms in the world. 
Licenses   CySEC, FCA, ASIC
Min Deposit:$200

Plus500

Highlights   Plus500 is a globally-regulated broker offering to trade on more than 2,500+ leveraged CFD instruments commission-free covering Forex, Commodities, Indices, Shares, Options and Cryptocurrencies.
Licenses  ASIC, CySEC, FCA, FSB, ISA, MAS
Min Deposit:$100

BDSwiss

Highlights  BDSwiss is a Forex and CFD broker offering to trade on 250+ instruments covering Forex, Commodities, Cryptocurrencies, Indices and Equities, from 3 account types on the MetaTrader 4 and MetaTrader 5 platform.
Licenses  CySEC, FSC
Min Deposit:$100

Step 2: Open an Account and Purchase a Share

Upon deciding on what brokerage suits you the best, you can then move into step two which is to open an account with that broker. In order to open an account via eToro for example you will need to provide the following information to the broker.

  • Full Legal Name
  • Home Address/Where you live
  • Date of Birth and age
  • Nationality
  • National Insurance Number
  • Mobile Phone number
  • Email Address

Verify Your Identity

All regulated broker platforms must comply with all relevant UK laws on anti-money laundering. This means that you will need to pass a basic KYC (Know Your Customer) process in order to verify your identity. As a regulated platform, you will be required to provide your identity in order to prevent fraud. You’ll be required upload two documents; these include a government issued ID and a proof of your address.

Deposit Funds

Upon opening your account and verifying your identity, you are now ready to go. But before you can begin to purchase shares, you will need to deposit into your account.

Choose Which Shares you Want to buy

Upon depositing funds into your account, you can now purchase whatever shares you choose. The easiest way to find a company that you are looking to invest in is simply by searching their name in the search bar at the top fo the page.

Finish Off Your Purchase

Upon deciding what business you want to invest your money, this is when you can go ahead and finish off the purchase. Keep in mind you will have to decide how much you want to invest into the business exactly. You can go for as little or as big as you like when buying shares.

Popular Stocks In 2020

How do I go about making money from an investment?

Once you have gone and bought shares from your brokerage, the next step is to try and make a profit in the long-term. The ways you can achieve this profiting is either through capital gains or dividends.

What are Capital Gains

No matter who you invest within, the goal will always be to make capital gains. This means in its essence that the price of the share rises upwards in its value. So, technically you are looking to sell your share for higher than what you purchased it for originally, thus making profit per share.

What are Dividends

The alternative method is through dividends. This is when a company shares out its profits to the shareholders of the company. However, be aware that not all businesses do this.

For How Long should I hold my ground on my shares?

This answer will be specific to you. Although generally you should hold for around five years on a share.

How do I go about reducing the risk involved in buying shares through an online brokerage?

No matter what asset you invest within, there will always be a sense of risk. That is why having a risk plan is so important. This plan is known as ‘diversification’. This essentially ensures that you do not put all your eggs in one basket by investing in multiple companies across different genres to spread out or ‘diversify’ your trading portfolio.

Diversifying with a singular trade

There is a way to diversify across different businesses by placing just one trade. This is by going across multiple markets and index’s using just one commodity.

How do I go about finding a broker to buy shares that best suits me?

It is important to find the platform that you feel is best for you and what you are looking for with your trading experience. The guidelines we have listed below will help you know what to look for when picking a platform to invest within:

  • Regulatory – Is it FCA Regulated?

The most important and the deal breaker when it comes to a platform is finding out whether or not it is regulated by the FCA. If it isn’t then kiss it goodbye and stay away from it at all costs.

  • Deposits and Withdrawals

The most optimal platform usually allows the ability to choose from a multitude of options when it comes to withdrawing or depositing in your account, as well as this, you need to find out the deposit and withdrawing fees that the broker has put in place.

  • Fees

The fees that a broker has in place across the multiple ways of charging is important too.

  • Tradeable Shares

Knowing what a platform actually has in stock for you is important too, they should have thousands of stocks available to you as a trader amongst a multitude of different markets.

  • Customer Support

The best markets offer the best customer support. Brokerages that offer constant customer service as well as support across several mediums such as chat, email, phone for example.

  • User-Friendliness

Brokers that feed into the benefits of the user is important too, especially if you are just starting out. Look for a platform that makes it simple.

FAQ

Is there any difference when it comes to shares and stocks?

Stocks are the asset themselves and shares are what determines the number of stocks you actually own.

Can I purchase US shares from the UK?

Yes, of course you can.

Do UK stockbrokers need a license?

Yes, they will need to have been licensed and regulated by the FCA in the United Kingdom.

Is ID a requirement when signing up for a broker?

Yes. They need an ID to prevent identity fraud and to keep in line with the regulations put in place by the FCA.

What is the minimum amount that I need to buy shares?

This varies from platform to platform. Some platforms can let you start with $5, others may ask for $200.
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Claire Collete

Claire collete has been a dynamic figure in the trading world for well over 20 years. It comes as no surprise that this successful trader has been so effective and influential in the trading market because it is not just a career for her, it’s her passion. Her expertise ranges from traditional stock and equity investments, to higher risk vehicles, such as binary options, making her knowledge and techniques successful on the many trading platforms she has utilized. Claire has also established herself as an educator and a writer, in order to share her accomplishments with so many others who are looking for guidance on their own path to success. She writes for MetaNews on a regular basis and has also gained recognition as an established platform reviewer. Claire is based in Syney, Australia.

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