How to buy stocks and shares in the UK

Buying shares often sounds like a complicated process. But by using the right tools, investing in the stock market can be easier than it sounds.

Investing in stocks and shares may sound daunting, but our handy guide will steer you through the dos and don’ts. 

When you buy shares in a company, you own a small part of it.

You could receive a share of the company’s profits if they pay a dividend, and you may even have voting rights. And despite appearances, buying shares can be a lot easier than it looks.

Let’s take a closer look at how shares work and how to buy them.

What are shares?

Shares are small portions of a company listed on a stock exchange.

Typically, these shares are issued and sold to investors to help businesses raise money and continue to grow.

But while buying shares can help businesses, it can also be good for investors, too.  

When you buy shares, you’re buying a part of a business and a share of its future success.

When the business does well and profits are good, these shares become more valuable as more investors will want to buy them.

If shareholders decide to sell their stake, they will likely do so at a higher price than they paid for the shares.

However, should a business underperform, these shares will depreciate in value, meaning investors could lose their money.   

How do you buy shares? 

Buying shares can sometimes seem like a complicated process, but it can be a lot easier than it first appears.

Shares are listed on stock exchanges, but you can start buying shares through a range of different platforms, apps and brokers.

Many platforms will help you access research on any shares you are interested in buying, but you should also keep an eye on any charges or fees you may need to pay to these platforms to make your share purchases.  

Having chosen a platform that suits you and done your research into which shares you are interested in buying, you are then free to choose which company to buy shares from and how many you would like to purchase.  

From the moment you purchase your shares, you will be able to monitor their performance.

While your shares may perform better or worse at different times, it’s a good idea to keep hold of any shares you own for around five to 10 years.

This can help share prices overcome shorter-term difficulties and recoup any losses they may have incurred.

Here's a quick summary of the steps to take to start buying shares:

Are shares worth buying?

Shares are an attractive buy for many people because they represent a simple means of generating potentially large returns.

If you buy shares in some of the world’s most successful companies, you’re staking that money on an already successful business.  

For some investors with larger risk appetites, buying shares could also be a pathway to earning large profits.

Invest in the right small company, and if it grows, it could deliver greater profits in the future.  

But there’s no guarantee of future returns just because a company has performed well in the past.

And investing in smaller companies in the hope of larger returns in the future is even riskier.

It’s important to remember that when you buy shares, you are staking money that you may not get back, so you should only be willing to invest what you are prepared to lose.  

Which platform is best for buying shares? 

From retail banks to online platforms, there are many ways to start buying shares.

In the UK, most people choose to buy shares through online platforms.

Here are four of the most popular investment platforms you could consider: 

1. Bestinvest

Bestinvest is a low-cost platform that’s well suited to beginners.

Users can choose from ready-made portfolios of stocks and shares, or can choose to build portfolios of their own.

The platform charges £4.95 for buying and selling shares, and there is also an annual fee, which can be up to 0.4% depending on how you are investing.  

2. Interactive Investor

The second-largest investment platform in the UK, Interactive Investor lets users buy shares on stock markets around the world.

The platform has a range of subscription plans available for investors, ranging from £4.99 per month to £19.99 per month, as well as a £3.99 buying and selling fee for US shares and a £5.99 or £9.99 fee for international shares, depending on the subscription level you choose.  

3. AJ Bell

AJ Bell offers ready-made investment plans in addition to letting users choose their own investments.

There is an annual platform fee which can be up to 0.25%, as well as a share dealing fee starting at just £1.50 per deal.  

4. Hargreaves Lansdown 

Hargreaves Lansdown helps investors of any experience buy and sell shares in the UK and international markets.

Like many other investment platforms, you can choose from pre-set investment funds, or you can choose your own investments.

Hargreaves Lansdown charges a dealing fee which changes according to how many deals have been done in the month prior, and 0.45% on its stocks and shares individual savings accounts (ISAs) up to £250,000. This fee is lower for those with more assets and is capped at £45 a year. 

How do you store your shares once you've bought them? 

In most cases, you will store your shares in a stocks and shares ISA.

Your ISA allows you to deposit a range of stocks, shares and financial products up to an annual threshold of £20,000.

By far the biggest advantage of investing through a stocks and shares ISA is that, regardless of whether or not the value of your investments has grown, you aren’t subject to Capital Gains Tax.

This means that investing through an ISA allows you to keep more of your money.  

Buying shares can help you achieve your financial goals, but it can carry risks as well.

Learn more: Stamp duty on shares

Get expert financial advice

While trading stocks and shares does carry a degree of risk, investing in them can be beneficial, especially if you invest in good-quality companies and take the time to do your own research on them.

If these companies deliver strong profit growth, your shares may increase in value, enabling you to sell them at a higher price than you bought them for and make a profit as a result.

However, it’s worth remembering that shares can fall in value as well as rise. 

By speaking with a financial adviser, you can make sure you are investing your money safely and smartly in stocks and shares that are most likely to produce significant returns.

Let Unbiased connect you with an expert financial adviser who can help you make the best investment decisions for your financial future.