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How to buy shares in a company
Want to know how to buy shares in the UK? Follow these 3 simple steps and you'll be a company shareholder.
There are plenty of reasons why you might want to buy shares in a company. Perhaps it’s a well-established blue-chip stock paying dividends, or a growing company you believe will go on to achieve great things. Whatever your motivation, investing and buying shares can be an excellent long-term strategy for building wealth. Learn how to buy shares and where you can find top share dealing accounts.
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. Owning stocks and shares has proven to be one of the best ways to build wealth over long periods of time. Being a shareholder means you can benefit if the shares go up in value, or if the company pays out dividend income.
How to buy shares in 3 steps
If you’ve decided investing is right for you, buying shares in a company can be pretty simple — follow these 3 simple steps to get started. We’ve detailed each one in this guide.
- Sign up for a share dealing platform. This will involve setting up an account with an investing provider, it should only take a few minutes.
- Research and choose shares to buy. Finding the right shares for your portfolio will take some time and research.
- Place an order. Once you’ve decided on your chosen shares, you just need to choose how much you want to invest and create a buy order.
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?
When a company lists on a stock exchange, it offers shares to the public, which are pieces of the company. When you buy shares, you become a part-owner and sometimes even get to vote on company decisions or receive dividends. The share price of the company moves up and down based on variety of factors, including financial performance, managment decisions, and even press coverage or news stories. This all helps the market decide a company’s valuation.
Step 1: Sign up for a share dealing platform
First things first, you’ll need to find a platform to buy shares with. This is where you’ll be able to see all the stocks on offer, buy or sell investments, and manage your portfolio. Most modern investors use an online share dealing platform, although you can still find brokers that work face-to-face or over the phone in the UK.
There’s a whole host of share dealing platforms available to choose from, so you can decide on one that has features, fees and account types that suits your confidence, skills and risk profile. There’s no harm in choosing a platform that looks good and is easy to navigate, too.
Ask yourself these questions to help you choose:
- Are you happy to buy and sell shares on your own? If you’re not, you may be better suited to a robo-advisor.
- Have you used your ISA allowance? You have a set amount in each tax year that you can save in an individual savings account (ISA) without paying tax on your profits. The allowance for the 2023/2024 tax year is £20,000. If you’ve not used your allowance yet, you might want to choose a provider that lets you use it, such as Freetrade or Trading 212
- How much research and information do you need? Some providers have a whole host of research that might look daunting but can actually be really helpful. Try to figure out what information you would benefit from when choosing a provider.
- How much will it cost you? Consider any flat fees, fees when you buy and sell (known as commission), monthly provider fees and foreign exchange fees. Try to find one with free withdrawals and deposits and no inactivity fees.
Use our table below to see some of the features and fees of some popular trading apps.
Share dealing platform comparison
Table: sorted by promoted deals first
Step 2: Choose the shares you want to buy
For this part, try to tune out any forums of experienced investors talking about stocks in what seems to be another language — you’ll learn the lingo soon enough, but first, get the hang of how it works.
The great thing is that your life is surrounded by public companies. Start out with ones that you’re really familiar with, like the brand that makes your mobile phone, the cereal that you eat or even the football team you follow. If you’re a gamer, there are lots of gaming stocks; if you’re vegan, you can choose meat or dairy substitute companies and green-fingered gardeners can easily sow seeds in a gardening company.
This method of investing means that you’re creating a portfolio of stocks that tends to match your values. Once you’ve got a few in your portfolio, you can look at diversifying by creating a portfolio with plenty of different industries and investment types.
If you’re nervous about diving right in, you could make use of the “watch list” feature on most apps to monitor share performance over time, or you could invest with a virtual portfolio — this is where you use virtual money to see how you’d get on. Some providers with virtual portfolios are Trading 212 or eToro.
Our guide to the best stocks to buy now tracks what’s trending on social media and popular trading platforms, but try to invest in companies you understand. The latest technology stock may look really good, but do you understand how it makes money?
Step 3: Place your order to buy shares
Once you’ve decided which shares to buy, find the share on your platform and hit “Buy” or “Deal now”. It will show you the current share price and let you enter the number of shares or value of the shares that you’d like to buy.
Remember that this isn’t like buying milk from a supermarket – there’s not an endless supply of shares. The stock market you’re buying from is generally the “secondary market”, which means someone’s got to sell their shares for you to buy them. This is usually straightforward and very quick, but you could wait a little longer and the share price could change in this time.
Some share trading platforms offer several different order types which might crop up in the process — 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.” |
Bottom line on buying shares
Once you own shares, you can keep an eye on the share performance. You could do this from time-to-time, when earnings reports are released, when dividends are announced or if any of your chosen companies get mentions in the media. Investing is a long-term game, you’d ideally want to invest for several years, but you could choose to sell a specific investment if it isn’t performing as well as you expected.
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.
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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.
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