How to buy shares in the UK: step-by-step guide

Interested in investing in the UK? It’s not always easy to know how to get started.

We’re here to help, with a handy step-by-step guide on how to buy shares in the UK. So read on for all the info you need on the process, fees, investment platforms and much more.

Disclaimer: The information in this article is for reference purposes only. Wise does not offer to buy or sell stocks, and all information on this page should not be considered financial advice. All investment decisions should be made after thorough research and consultation with a qualified financial advisor. Remember that investments, even in low-risk funds, are never guaranteed and your capital is at risk.

How to buy shares

Here's a step-by-step on howto buy shares in the UK:

1. Decide whether buying shares is right for you

There are lots of different ways to invest, from stocks and shares to funds, bonds and investment trusts. All work in different ways, and have different levels of risk. You need to work out what level of risk you’re comfortable with, as well as choosing the investment method that suits your short and long-term financial goals.

2. Open a trading account

There are lots of investment platforms available in the UK, including the likes of Webull, eToro, Trading 212, IG Trading and many more. Do some research, choose the right one for you and open your trading account. You’ll usually need to verify your identity as part of the application process.

Remember, always check that the company is listed on the FCA register to ensure that they are a legitimate company.

3. Make a plan

Smart investing is all about having a plan, which means setting goals and working out the best way to achieve them. Your plan should include the following:

• An assessment of your current financial situation and how much you can afford to invest
• How long you're willing to leave your money invested
• What platforms/trading products you put your money into to achieve your goals.
• The level of risk you’re comfortable with
• Whether you need any expert advice to help you choose shares to buy and achieve your goals.

4. Add funds to your account

This is where you transfer funds from your bank account over to your investment platform, ready to purchase shares.

5. Decide which shares and how many you want to buy

It’s important to do your research, deciding which company’s shares you want to invest in. Alternatively, you can invest indirectly via professionally-managed investment funds.

When it comes to the level of investment, you have two main options. The first is to buy a specific number of shares, while the second is to set a fixed amount of money to invest.

6. Place the trade

Follow your chosen platform’s processes for buying shares. You should be able to do it in just a few clicks.

7. Monitor your portfolio

With your purchase made, it’s now time to use the platform’s tools to review the performance of your shares. You can usually do this in real-time, as well as accessing historical data.

What are the different ways to invest in shares?

1. Invest via funds indirectly

This is where you invest in a professionally-managed investment fund. Money from multiple investors is pooled, and used to purchase a ‘package’ of shares and often other assets such as bonds. There are a wide range of funds to choose from, spanning different industrial sectors.

2. Invest directly in individual shares

The second way to buy shares is to do it directly, choosing a publicly listed company and buying its shares. This option can be riskier, so is best for more experienced investors who are confident in carrying out their own research.

Types of investment funds

If you like the idea of investing in a managed fund, there are three main options to choose from.

Investment funds

Known as ‘open-ended investment companies’ (OEICs), these are actively managed investments. The fund manager chooses the holdings, while investors buy units.

Exchange-traded funds (ETFs)

ETFs are a type of pooled investment security. They hold multiple assets, but can be traded on an exchange just like stock. They are designed to track an index, currency, sector or commodity.

Investment trusts

These are companies which raise money by selling shares to investors. This money is then pooled in order to buy and sell a range of investments.

Is buying shares worth it? What are the risks?

Investing in shares can offer a number of benefits. This includes returns through share price appreciation or dividends, as well as the chance to diversify your investment portfolio (in order to mitigate risk).

But the crucial thing to remember is that share prices can go down as well as up. This leaves a very real risk that you could lose all the money you invest.

Aside from share price volatility, other risks include stock market downturns, exchange rates risks and liquidity risk (where the company you invest in goes bankrupt).

How much does it cost to buy shares in the UK?

There are costs involved in buying shares in the UK. This includes platform, commission and trading fees, as well as Stamp Duty Reserve Tax (SDRT). This is 0.5% and applies to shares bought electronically.¹

You also need to know about the ‘bid-offer spread’. This is the difference between how much a seller wants to get for stock, and the price a buyer is willing to pay for shares.

What fees are involved in buying shares?

Platform fees

Many trading platforms charge fees, although not all do. This is usually an annual fee, either a flat fee or a percentage of around 0.25% to 0.45% of the value of your portfolio.²

Share trading fees

There are also share trading fees to consider. This is usually a flat fee charged every time an investor buys or sells shares, ranging from £5-£10 per trade. However, some platforms don’t charge any trading fees.²

Foreign exchange fee

If you are buying or selling stocks and funds listed abroad, you could be hit with extra cost for cross border money transfer.

The good news is that you can use Wise to avoid hidden currency exchange markups. Open a Wise account to convert currency at mid-market exchange rates, for low, transparent fees*.

You can also use your Wise account to conveniently manage your money in up to 40+ currencies and choose the ‘Stocks’ option on your chosen Jar or balance and we’ll invest it in the index tracking fund we’ve chosen.

Open your Wise account

Additional fees

Other fees may apply when buying shares, depending on the platform. These may include:

• Inactivity fees (for not using your account)
• Telephone fees (if trading via phone)
• Withdrawal fees (for withdrawing money from the platform)

Investment platforms in the UK for buying shares

Before choosing an investment platform, always carefully research and check that the firm you are dealing with is listed on the FCA register, this will reduce the likelihood of falling prey to scams.

Here’s a quick look at some of the most popular investment platforms available in the UK right now:

Platform	Features	Fees
Trading 212	Fractional shares Earn interest on your portfolio FSCS protection	No account fees No commission fees3
eToro	Multi-asset platform Virtual trading tool Ready-made portfolios	No account fee No commission fees Currency conversion fees apply (for all trades not in USD)4
IG Trading	Demo account Wide range of tradable assets	No account fees Commission fees of £0 for US shares and from £3 for UK shares5
Webull	Trading in US, CN and HK stock markets Virtual trading tool	No account fees Commission fees - 2.5 basis points6
Interactive Brokers	Fractional trading Overnight trading hours IBKR GlobalAnalyst	No account fees Commission fees from 0.05% for UK stocks7

3 reasons people invest and buy shares

1. Build savings or plan for retirement
2. Protect money from inflation and taxes
3. Earn returns from share price appreciation and/or dividends.

When should you buy shares?

Ideally, you should only buy shares when you have at least 3-6 months income available to cover any emergency expenses. You should have cleared any short-term debts and be ready to invest for at least 5 years. You also need to allow time for research.⁸

How long does it take to buy shares?

If you’re using an online platform and already have an account, you should be able to buy shares in a matter of minutes.

What type of accounts can shares be held in?

In the UK, shares can be held in one of three different ways:⁹

• Certificated (where you get a paper share certificate and your name is recorded on the company share register)
• Personal Crest account (your name is recorded on the company share register and in digital form within the Crest system)
• Nominee account (your stockbroker is listed as the legal owner of the shares on the company share register).

What are the alternatives to share dealing?

There are lots of ways to trade and invest, including funds, bonds and investment trusts. You can also invest in an ISA.

Earn a return on your Pounds, Euros and Dollars with Wise

Another alternative to share dealing is Wise Interest, available with the Wise account. It lets you earn returns in GBP, USD and EUR by investing in a fund that holds government-guaranteed assets - and all while retaining easy access to your money.

Capital at risk.

---

FAQs: Buying shares in the UK

What is the difference between a share and a stock?

A stock is an equity instrument issued by a publicly listed company that represents ownership of that company, while a share represents one unit of that ownership.

Can I buy shares without a broker?

You don’t have to use a broker to buy shares, as you can use online platforms to carry out your trades.

Can I buy shares from any company?

You can buy shares from any company that is listed on the public stock exchange.

Can you buy a single share?

It is possible to buy just one share in a company, but bear in mind that some online trading platforms have minimum trade requirements.

How much do I need to start buying shares?

Ideally, you should have at least 3-6 months income in the bank to cover emergencies, just in case you lose what you invest.

Do I have to pay tax on shares?

For most types of shares bought electronically, you’ll need to pay Stamp Duty Reserve Tax (SDRT) of 0.5%.¹

Do you pay stamp duty when you sell shares in the UK?

No, stamp duty is only payable when you buy shares, not when you sell them.¹

How to avoid capital gains tax on shares?

If you’re liable for capital gains tax on the sales of shares, you can potentially use your ISA allowance to minimise the amount owed.¹

---

FAQs: Wise Interest and Wise Stocks

Can I earn interest or a return with a Wise account?

You can earn returns on GBP, USD and EUR by opening a Wise account and investing in a fund that holds government-guaranteed assets.

Open your Wise account

How do I use Wise Interest and Stocks?

If you are eligible, you can decide how you'd like the money in your account to be used. Simply check the Wise app, select your chosen balance or Jar and select ‘Earn’. From there, currently you can choose to keep your balance as ‘Cash’ (which is the default) or make your money work for you in one of two ways; Interest or Stocks.

Wise Interest and Stocks are only available to UK, Singapore and some EEA residents. If you see the option to change your balance or Jar from Cash to Interest or Stocks, then you're eligible.

How do I switch between Cash, Interest and Stocks on the Wise app?

Your money in Wise is automatically kept as Cash in your balances and Jars, but you have the flexibility to switch it between Stocks, Interest, or Cash whenever you'd like.

Here's how to adjust how your money is used:

1. Go to the balance or Jar you'd like to modify.
2. Under Balance information, select Earn.
3. Choose from the available options (see below).

What happens if I select Cash?

Nothing. This is because your balances and Jars are by default, held as Cash. If you choose this option, you can’t earn a return on the money you spend, but it isn’t at risk in the market.

What happens if I select Stocks?

Choosing this option means we’ll invest some or all of your money in your chosen Jar or balance in the index tracking fund we’ve chosen.

What happens if I select Interest?

If you want to earn a return on your money, opt for ‘Interest’ and you’ll see the option to invest all or some of your money in the Jar or balance of your choosing and we’ll invest it in the interest-earning fund we’ve chosen. This will depend on the currency.

Please note: If you change how your money is held, the icon will temporarily display as "Pending" while the change is processed. This can take up to 2 business days, but may require an additional business day if you have ongoing transactions in progress or previous changes are still being processed.

Disclaimer: The information in this article is for reference purposes only. Wise does not offer to buy or sell stocks, and all information on this page should not be considered financial advice. All investment decisions should be made after thorough research and consultation with a qualified financial advisor. Remember that investments, even in low-risk funds, are never guaranteed and your capital is at risk.

---

Sources used:
1. Barclays - Adding up the costs of buying and selling shares
2. Forbes - How To Invest In Stocks & Shares
3. Trading 212 - Terms and fees
4. eToro - Trading fees
5. IG - Share dealing
6. Webull - Pricing
7. Interactive Brokers - Commissions
8. Lloyds Bank - Investing for beginners
9. Better Finance - Choose the right way to hold your shares

Sources last checked on date: 12-Aug-2024