How to Buy Shares in the UK – How to buy stocks and shares in the UK
The London Stock Exchange (LSE) is one of the world’s oldest platforms for the trading of equity securities.
If you are interested in learning how to buy shares in the UK, it helps to understand the basics of the LSE.
The first thing you should know about how to buy shares and stocks in the UK stock market is that what you are purchasing are equity securities, which are essentially documents of ownership.
If you buy one share of Tesco, for example, you are acquiring a tiny fraction of ownership interest in that British supermarket giant.
The second thing to learn is the concept of retail brokers or dealers.
These financial platforms are listed as official shareholders of companies listed on the LSE;
they hold company stock that they offer to clients, and this is essentially how to buy shares in the UK.
Although the LSE is a public financial exchange, you can no longer walk up to its Paternoster Square location in the City of London to buy or sell shares in UK companies;
you must go through a share dealing broker, and this is because of reasons related to high trading volumes, organization, and security.
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How Do I Buy Shares in the UK?
When you acquire shares of a British company listed on the LSE, you are effectively buying into their business.
To do this, you have to open an account with a retail broker that will be your go-between with the stock market.
Share dealing companies must be licensed with the Financial Conduct Authority of the UK.
These providers of financial services will require new clients to disclose personal information in compliance with Know Your Customer (KYC) and Anti-Money Laundering (AML) legal provisions.
Depending on the broker firm you choose, there may be minimum deposit requirements as well as platform access fees and share dealing charges.
Since we are living in the 21st century, the answer to “how do I buy shares in the UK” is simple: You do it through an online platform.
After you are approved for a share dealing account, the broker will instruct you on the various ways you can access your account and place orders.
Although many firms still conduct business over the phone, through a facsimile, and even via orders delivered by the Royal Mail, the most common method is to trade online.
Your broker may offer a variety of online platforms; some of them may require you to download and install a software application that connects to the share dealing firm, but they will more than likely provide access through a web platform or mobile application.
How to buy stocks and shares in the uk: One advantage of doing business with UK share dealing firms is that many have expanded their trading options to include stock from non-British companies.
Depending on the broker you choose, you may be able to purchase shares in major American companies such as Apple, Google, Microsoft, Goldman Sachs, and others.
How to Buy Shares in the UK Stock Market
All stock exchanges such as the LSE list share prices that are determined by market forces;
these values are derived from the reactions of investors who review the financial statements of the companies, and also by trading volumes as well as external factors such as macroeconomic indicators.
Your share dealing platform will have two main sections: your money account and your portfolio.
The funds in your account represent liquid cash that your can invest.
The portfolio will show you the shares you have acquired as well as the orders you have placed along with features.
All platforms provide information collected from the LSE as well as other sources.
Each time you select a stock, you will be presented with information about the company as well as data such as share price, type of shares available, trading history, performance analysis, and analyst opinions.
You will also see news coverage related to the specific stock as well as economic developments that may influence market forces.
The value of stocks you acquire, the share dealing charges, and the platform fees are all deducted from the balance of your money account.
Let’s say you open an account with a broker that charges £2 per month in platform fees and £2 for each share dealing transaction.
You fund your account with £500 and are interested in acquiring one Royal Bank of Scotland share at £111.50.
Here’s how your account and portfolio would look after completing the transaction:
- Money account: £384.50
- Investment portfolio: £111.50
Notice how the broker deducted £2 for the first month of platform access plus another £2 for the transaction in addition to the value of one RBS share.
If you return to your account in one month to sell the RBS share, you will once again be charged for platform access plus the transaction.
The value of the RBS share you sold would be transferred to your money account.
How to Buy Shares : Personal Financial Responsibility
One of the most important aspects of how to buy shares in the UK is the concept of money management.
All prospective investors must understand that any investment has the potential to lose its value, which means that you should never risk money that actually need.
Rembolsponsible investors make sure that they have at least a couple of months worth of household expenses before investing in the stock market.
In other words, do not invest savings that have been set aside as emergency funds; only invest what you can afford to lose.
An Example of How to Buy Shares and Stocks in the UK
Let’s say you are a buy-and-hold type of investor. You like the performance and trading history of British Petroleum shares, which you see trading at £294 in late July.
You have £3,000 in your money account, which is enough for 10 shares of BP:
- £2 for platform access
- £2 for share dealing transaction charge
- £2,940 for 10 shares of BP
Now your money account will be £56, but your portfolio account rose to £2,940.
Let’s say the share value of BP rise to £350 in August; this will put you in a position to profit with capital gains, so you put in a sell order for all 10 shares at that price:
- £2 for platform access
- £2 for share dealing transaction charge
- £3,500 transferred from your portfolio to your money account
In the scenario above, your money account will now be $3,522, and you will be able to transfer funds to your personal bank account. (How to buy stocks and shares in the uk)
