Buying shares is an exciting, but sometimes daunting, part of your investing journey. Unlike in the past, it’s now easier (and cheaper) than ever before to buy shares and own pieces of companies from around the world. In fact, Finder’s investment statistics show that over half of Brits have invested, as of 2024. But some people trip at the first hurdle, scratching their heads about how to actually buy shares. So, we’ve got you covered for those first important steps.
Key takeaways
Buying shares in a company means you become a shareholder and own a piece of the business.
To buy stocks and shares in the UK, you’ll need to set up an account on a share dealing platform or online brokerage.
Once you have a UK investment account, you can buy shares by placing an order.
Why buy shares?
Buying shares and investing in the stock market gives you ownership of a real asset. It allows you to own pieces of companies and the reason this should be appealing is because it means you can become a business owner, without having to actually control or run the company yourself – ideal.
The true benefit of buying shares and becoming a part-owner is that you also get the opportunity to earn a share of the profits (or losses in some cases). And it’s proven to be one of the best ways to build wealth over long periods of time. The process of buying shares used to be complex and reserved for those with deep pockets or direct connections to businesses. Today, the doors have been flung wide open and now you can become a shareholder with minimal fanfare or effort.
How to buy shares in 5 steps
Here’s a step-by-step guide explaining the basic process of how to buy shares:
Open a sharing dealing account. Whatever type of shares you want to buy, you’ll first need to open a share trading account.
Fund your account. The next step is to deposit money into your account before buying shares, this is usually done by bank transfer or using a debit card.
Research your shares. Some platforms will help with investing inspiration, but you’ll still need to research the stocks and shares you want to buy.
Find your shares. Once you know the shares you want to buy, you can search for them either by name or by the stock ticker symbol. Some stocks will only be available on certain platforms.
Hit buy or create an order. Some platforms have a “buy” button, but more sophisticated trading apps will ask you to create an order, and then you’re good to go.
All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Past performance is no guarantee of future results. If you’re not sure which investments are right for you, please seek out a financial adviser. Capital at risk.
What are shares?
Shares are pieces of companies. When a business is created, a certain amount of shares are also created and each one represents a portion of ownership. Buying shares and becoming a shareholder means owning pieces of that pie.
The more shares you buy, the more ownership you have in that company, which means greater exposure to any potential profits. However, the more you invest in a single company also means greater exposure to potential losses if the business performs poorly.
How can you make money with shares?
There are 2 basic ways that you can make money after buying shares:
Appreciation. This happens if you buy shares and the stock goes up in price. You can then choose to sell shares at the higher price.
Dividends. This is when a company pays you a portion of its profit to reward you for being an investor and you can either spend the dividends or reinvest them.
How much does it cost to buy shares?
Use our table below to see some of the features and fees of some popular trading apps.
This is a personal decision and the answer will depend on your goals, appetite for risk and time horizon. If you have expensive debt, don’t have an emergency fund and still need to iron out your budgeting plans, you might want to hold off.
If you have funds you’re happy to put aside for a decent amount of time (at least 5 years) with the aim of higher returns (compared to something like a savings account), you should explore the idea of investing and buying shares. There are also other ways to invest without picking individual stocks and shares as well.
The cost to buy shares
When buying shares, like with everything – there’s no such thing as a free lunch. Here are the main costs involved:
Platform fees. There are some share dealing accounts that are free to use but others will charge you a fee. This cost will usually be either a flat monthly fee or a percentage fee based on the size of your portfolio.
Commissions. When buying or selling stocks and shares, you’ll often have to pay a commission. Again, this could be either a flat fee per trade, or a percentage fee based on the size of your trade. There are 0% commission apps and platforms that don’t charge anything, which is great, especially for investing with smaller amounts.
Tax. When buying UK shares, you’ll usually have to pay a 0.5% stamp duty reserve tax (SDRT). Other international markets may involve additional tax payments.
Foreign exchange (FX) fee. If you decide to buy shares from outside the UK stock market, like the US for example, you’ll likely have to pay an FX fee which is usually a percentage based on the size of your stock trade.
The risks of buying shares
When investing in stocks and shares, there are some broader downsides you need to think about:
Losing money. There is a possibility when investing that you could lose some (or all) of your investment, so don’t use this month’s rent or mortgage payment to buy shares.
Picking investments. Some stocks and shares come with a higher potential risk than others, so it’s important to do plenty of research and buy investments that align with your risk profile.
Lack of diversification. It can be tempting to buy shares that are similar, like tech stocks for example. But doing this could mean a lack of diversification and put your portfolio at risk.
Ongoing management. If you’re picking shares to buy, you’ll also need to keep an eye on them, and this can be tough if you don’t have the time or don’t enjoy the process of researching businesses.
Benefits of buying shares
Although there are risks to be aware of, there is also plenty of potential upside when investing in stocks:
Wealth building. Over time, investing in stocks has proven to be the best way to build wealth in the long run, outpacing inflation and providing a better return than a savings account.
Company ownership. Being a shareholder means that you own a piece of the company and a share of the profits.
Dividend income. A large number of established companies pay shareholders dividends for holding shares. The best dividend stocks can provide a relatively stable source of passive income (although dividends aren’t guaranteed).
Financial education. Buying stocks and learning about the markets is an excellent way to further your financial education, helping you make better sense of the economy and the world around you.
Different ways to buy shares
Some investing platforms offer several different trading order types, we’ve detailed some of the most common ones below with some examples of how they work.
Order type
What it does
For example
Ask
How much the seller wants for the stock
“Jack, when you sell the cow, don’t take any less than £5 for it”
Bid
How much the buyer wants to give you for the stock
“Don’t spend any more than a few magical beans on that cow, you hear me?”
Market order
When you buy or sell a stock to be carried out as soon as possible at the best available price
“Go out and sell the cow, quick! We’ll take £4 for it if it goes today!”
Limit order
When you buy or sell a stock but want it to be a specific amount
“If we can’t get £5 for the cow, we won’t sell it. We’ll put up an advert for the cow and wait until someone offers £5.”
Stop loss/ stop
An order where you set the price you want to buy or sell at, and once the price is met, it triggers an order.
“Everyone’s selling their cow. If the price drops to £4, let’s sell ours before we lose any more money.”
Choosing a platform to buy shares
Here are some questions to ask yourself and key things to think about when comparing platforms for buying shares:
Are you happy picking stocks? If you don’t want to research and buy shares yourself, you might want to choose a robo-advisor platform instead.
What are the fees and costs? Some platforms have minimal fees. If you’re investing with small amounts, it’s usually a good idea to keep your fees low.
Is customer service important to you? If so, you might want to look at one of the more premium platforms that usually cost more, but offer a higher level of customer service.
Do you have a stocks and shares ISA? Using your ISA allowance is a great way to protect any returns from tax in the UK, but not every platform offers a stocks and shares ISA.
Are you investing smaller amount? If you are investing on a budget, you may need a platform offering fractional shares because this allows you to buy small portions of full shares.
Alternative ways to buy shares
If you don’t want to research and pick your own stocks, here are some alternative investing options:
Robo-advisors. This is a hands-off approach and these platforms will pair you with a portfolio (usually based on your appetite for risk) and then automatically invest for you.
Exchange-traded funds (ETFs) and index funds. Using index funds and ETFs to invest is a simple way to invest in a whole bunch of stocks. For example, with one ETF investment, you can buy all the shares in a popular index like the FTSE 100 or the S&P 500.
Investment trusts. This type of investment trades like a normal company where you can buy and sell shares, but using an investment trust means buying shares in an expertly managed portfolio of stocks.
The simplest way to buy shares is to get yourself set up with a cheap platform (ideally one with no platform fees). Also, look for a 0% commission option that lets you invest small amounts of money. Doing this means you can get started investing with as little as £1 or £2 and minimal other costs to worry about.
One of the best (and easiest) ways to get to grips with investing is to actually go through the process of buying shares. However, trying it out first with a small amount of money is an excellent way to get your feet wet and learn the ropes. There’s no point paying high platform fees and large commissions when you’re just starting out.
Pros and cons of buying shares
Pros
Owning a piece of a business
Opportunities to make money and build wealth
Improve your financial knowledge
Cons
You may lose some or all of your investment
The process can feel complex at first
Ongoing portfolio management can be time consuming
Bottom line on buying shares
Buying shares is an exciting process and it can be straightforward to invest. However, it’s really important to make sure that the rest of your finances are looking healthy before you buy shares. Also, ensure you do plenty of research first to find the right platform and avoid buying stocks or other investments that don’t align with your individual appetite for risk.
Now that you’re completely informed on how to buy shares, check out our guide on how to sell shares to get an idea of how to sell your stocks and what the process looks like.
Heart vs head: Are more investors choosing passions over pounds?
Finder published a paper in October 2022 exploring how investors' passions impact their investment choices. This report includes findings from our survey of 2,000 adults on how they choose investments as well as insight from investment experts, including Vedat Mizrahi PhD, chief financial officer at Mintus; Matt Cooper, chief commercial officer at Crowdcube; Charlie Macpherson, head of investment at CIRCA5000; Jonquil Lowe, editor of The Good Retirement Guide, published by Kogan Page; and Marc Hendriks, chief investment officer at GreenGrowth.
If you want to. Some shares can work out really pricey, so you might only be able to afford one share within your budget.
One of the best ways is to use a cheap platform designed for beginners. Or, try a platform that comes with a demo account so you can practise first.
But if choosing and buying shares sounds like too much effort, you can always use some form of investment fund or an account that will help pick a portfolio for you.
You need to open a share trading account, deposit funds, research the shares you want to buy, and finally, create an order to buy the shares.
You first need to decide if investing is right for you and ensure the rest of your finances are looking healthy. Next, think about your goals, risk tolerance and time horizon for investing. Once you have a clear understanding of your position and needs, the process of investing in shares is quite straightforward with some platforms.
You can either sell your shares if they appreciate in value, or you can make money through dividend income. Dividends are payments that companies make to reward investors who hold shares.
Yes! Sometimes in investing, this is referred to as a DIY approach, you just need to make sure you’re set up on a share dealing platform. If you don’t want to buy shares yourself, you can always consider using something like a robo-advisor that picks and manages your investments for you.
As many as you like. Maybe don’t put all your money into one stock, though. You should diversify your portfolio a little and buy several shares, or even fractional shares of many companies to protect yourself a little.
You can start with £1 with many providers, so you don’t need to be earning hundreds of thousands of pounds each year to be able to afford investments. A lot of providers have fractional shares, too, so it’s very accessible.
All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Past performance is no guarantee of future results. If you’re not sure which investments are right for you, please seek out a financial adviser. Capital at risk.
George is a deputy editor at Finder. He has previously written for The Motley Fool UK, Nasdaq, Freetrade, Investing in the Web, MoneyMagpie, Online Mortgage Advisor, Wealth, and Compare Forex Brokers. He's focused on making personal finance and investing engaging for everyone. To do this he draws from previous work and his Level 4 Diploma for Financial Advisers (DipFA), sharing what he’s learnt. When he’s not geeking out about money, you’ll find him playing sports and staying active. See full bio
George's expertise
George has written 185 Finder guides across topics including:
Looking to invest? Here’s how you can open a share trading account online in a few easy steps. Found out how to choose the best share dealing platform.
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