Living in the UK, you may be interested in buying stocks in companies. But, if you’re new to investing, it can all feel a little daunting. The good news is that online brokers provide a quick and convenient entry point. Simply put, these are sites (and apps) where you can buy and sell stocks in the UK.

How to Invest in Stocks in the UK

 

They typically won’t be as personalized as classic, full-service brokers who provide bespoke guidance and recommendations. But these platforms offer a fuss-free, low-cost way to invest, often with no commissions on trades. Remember to always check the fine print on charges before joining up.

Investing can mean:

  • Buying individual equities, i.e. shares in a company, which will make you a part-owner of that company
  • Buying exchange-traded funds, or ETFs, which are bundles of investments allowing you to diversify your portfolio

Bear in mind, that this guide is just a quick overview of investing in the UK, and the information provided here is not intended to be financial advice. Investing in the stock market can be risky. You should consider seeking professional advice before investing in the stock market.

Buying Stocks in the UK 101

You can think of such exchanges as supermarkets for buying and selling stocks. Investors flock to these exchanges in order to snap up stocks they find attractive. There’s an array of exchanges out there, and even non-investors will know some of the biggest ones. These include the Nasdaq, the New York Stock Exchange, and the London Stock Exchange.

You’ll be able to access stock exchanges by logging into your online brokerage account. For example, you’ll be able to navigate to the London Stock Exchange section of the site or app. Here, you can see the current prices for shares in companies like Unilever, Tesco, and eastJet. You can then decide whether or not to buy. It’s really that simple, but remember that prices will fluctuate depending on supply and demand at any given moment.

Start Investing Early

It might be tempting to hold off on investing till some future time when your income is over a certain threshold. However, it may actually be more prudent and productive to get investing as early as possible. Let’s look at a few reasons why.

More Time to Grow Wealth

The earlier you start investing, the more time you’ll have to gather assets, reinvest earnings, and grow your portfolio. You’ll be laying the financial foundations for your retirement. You’ll also have more time to make up for any losses incurred, compared to those who invest later in life.

Beating Inflation

The cost of living in the UK is a particular concern in our uncertain times. Say inflation rises above what your bank savings account generates in interest. This means your savings will shrink in value, as they’ll have less purchasing power. Investing in high-yielding companies is one way to potentially avoid this issue. That’s because your returns may be significantly more than what your bank will pay in interest. Remember, however, that you’re playing the long game here. Generally, you’ll want to hold investments for several years to ride out the marketplace’s ups and downs.

Diversifying Your Stocks

You may hear the word ‘diversification’ mentioned a lot. This simply refers to holding investments in different companies and sectors. Diversifying your stocks is a wise move, as it means you won’t be “putting all your eggs in one basket”. Instead, you’ll be hedging your bets by spreading your investments around. Say, for example, you’ve invested in one company/industry sector which suffers a dip in fortunes. If you’ve diversified, your other more fruitful stocks may make up for this loss.

Where to Buy Stocks in the UK: Penny Stock Strategies

You don’t need to have lots of disposable income to start investing. You might want to consider penny stocks, which are typically traded at below £1 per share.

There are a few key reasons why penny stocks should be on your radar. The most obvious benefit is affordability, compared to stocks in big-name companies that come with steep price tags.

Just as importantly, penny stocks can let you stake a claim on startup companies that may be poised for big things. Yes, there’s a risk you’ll back a dud, and the company will never amount to much. If so, the relatively low cost of the stocks should lessen the sting somewhat. On the other hand, if the company really takes off, you may see your penny stocks balloon in value.

Imagine buying a slice of the next big thing when it’s still in its infancy. That’s the prospect that can make penny stocks so interesting. But this is also why research is very important. Before investing, you should thoroughly research penny stock companies. What are their backgrounds? Have they identified a particular niche? Have speculators been talking about these companies in blogs and online forums?

In the UK, penny stock companies are usually listed on the Alternative Investment Market (AIM). This is a submarket of the London Stock Exchange, designed especially for smaller companies looking to attract investment.

How to Buy Stocks in the UK

Where to Buy Stocks in the UK: Investing in Innovation

In theory, companies that innovate within their industries should flourish and make money for their investors. Of course, things don’t always pan out that way in real life. Some promising companies may be out-flanked by equally innovative competitors. Or, their particular industry may not be a very lucrative one in the long run.

Again, you’ll want to research before putting your money on the line. Look at which industries are booming, or set to boom. For example, the global energy market looks to be undergoing a seismic shift. This is in response to concerns about the climate crisis and soaring fuel prices. Green energy firms, such as offshore wind farm companies, may therefore provide attractive investment opportunities.

Other booming markets for UK investors include:

  • E-commerce companies, such as online retailers and food delivery firms
  • Fintech companies, which continue to innovate within the online payments space
  • Online gaming companies, which fared well throughout the pandemic

Many investment firms offer ETFs (exchange-traded funds) that bundle stocks in future-facing industries like robotics, fintech, cloud computing, nanotechnology, and genomics. You can check out some of the most popular ones available to UK investors here.

What is Profit-Taking?

This is an example of stock market jargon referring to something very straightforward. It simply means selling stock after its value has risen, thereby locking in your profit.

Profit-taking may take place when investors see an abrupt spike in the value of their shares. It’s crucial to remember that stock prices can soar and drop depending on multiple factors. Whether you choose to cash out or not will depend on your own finances and longer-term goals.

Stock Investing and Risk

The bottom line is that risk is an inherent part of investing. You are, in effect, betting on whether your stocks will rise or fall in value. If you do your research like any savvy investor should, these will be informed bets. However, there are no iron-clad guarantees.

Diversifying your stocks, thinking of your investments as long-term projects, and keeping up with industry news will all help you navigate the markets and hopefully reap the financial rewards.

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This publication is provided for general information purposes only and is not intended to cover all aspects of the topics discussed herein. This publication is not a substitute for seeking advice from an applicable specialist or professional. The content in this publication does not constitute legal, tax, or other professional advice from Remitly or any of its affiliates and should not be relied upon as such. While we strive to keep our posts up to date and accurate, we cannot represent, warrant or otherwise guarantee that the content is accurate, complete or up to date.