How to buy shares in a company

Want to know how to buy shares in a company and you're in the UK? Follow these 7 simple steps and you'll be a share owner.

With interest rates on savings hovering around 1.5%, many savers are looking for other ways to potentially boost their savings and investments are one of them. There are many ways to invest in the stock market – buying individual company shares is one way.

When a company lists on a stock exchange, it offers shares, which are little pieces of the company. When you buy shares, you get to vote on some of the company decisions and might be able to receive dividends. The share price of the company moves up and down based on factors that include decisions made by the company, how it performs financially and positive or negative press coverage. This helps to decide on how the company is valued.

How to buy shares

Buying shares in a company is actually pretty simple. Follow these 7 simple steps to get started. We’ve detailed each one in this guide.

  1. Choose an online share-dealing platform
  2. Sign up for an account
  3. Choose the shares you want to buy
  4. Place your order to buy shares
  5. Pay for the transaction
  6. Monitor the performance of your shares
  7. Sell your shares (if you want to)

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.

Step 1:

Choose an online share-dealing platform

First things first: you’ll need to find a broker to buy and sell shares. These days, most people go for an online share-dealing platform, also known as an online broker or stock brokerage app, although you can still find brokers that work face-to-face or over the phone in the UK.

The right online share-dealing platform for you will depend on how confident you are when investing, whether you want to do it all yourself, and what fees are involved for the volume of trading you’re looking at.

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 2021/2022 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.
  • Do you want to be given ideas or are you happy to find them yourself? Some providers have watch lists and investment ideas to help you choose.
  • 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.
  • What is the pricing structure? You can get flat fee providers, ones that just charge commission for the trades, ones that have provider fees and others that only charge foreign exchange fees – figure out how often you’ll trade and how much this might cost you.

Your choice could also depend on what else you want to trade. Will you be buying funds (such as exchange-traded funds (ETFs)) alongside individual shares, for example? Do you use investment trusts? Check that the online broker you pick can meet your needs.

Share dealing platform comparison

Table: sorted by promoted deals first
Name Product Ratings Finder rating Customer rating Min. initial deposit Price per trade Frequent trader rate Platform fee Offer Link
FREE TRADES
eToro Free Stocks
Finder score
★★★★★
User survey
★★★★★
★★★★★
Expert analysis
★★★★★
User survey
$50
£0
N/A
£0

Capital at risk

Platform details
Barclays Smart Investor Investment Account
Finder score
★★★★★
★★★★★
Expert analysis
Not yet rated
£0
£6 (Funds £3)
N/A
£4 to £125 per month

Capital at risk

Platform details
Finder Award
OFFER
Freetrade
Finder score
★★★★★
User survey
★★★★★
★★★★★
Expert analysis
★★★★★
User survey
£0
£0
N/A
£0
Claim your free share worth between £3 and £200. Capital at risk.

Capital at risk

Platform details
interactive investor Trading Account
Finder score
★★★★★
User survey
★★★★★
★★★★★
Expert analysis
★★★★★
User survey
£0
£7.99 (with one free trade per month)
N/A
£9.99 per month

Capital at risk

Platform details
Degiro Share Dealing
Finder score
★★★★★
★★★★★
Expert analysis
Not yet rated
£0.01
UK: £1.75 + 0.014% (max £5)
US: €0.50 + $0.004 per share
N/A
£0

Capital at risk

Platform details
Hargreaves Lansdown Fund and Share Account
Finder score
★★★★★
User survey
★★★★★
★★★★★
Expert analysis
★★★★★
User survey
£1
£11.95
£5.95
£0

Capital at risk

Platform details
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Compare up to 4 providers

Step 2:

Sign up for an account

Once you’ve chosen a platform you’ll need to register for an account. This step is usually free, but keep in mind that some providers may charge subscription fees or other ongoing fees for features such as market research.

The registration process takes place online and if you’re a new customer you’ll usually need to provide:

  • Personal details. Your name, email, date of birth, address, national insurance number and employment status.
  • ID. Such as your passport or driving license.
  • Payment details. Either a bank transfer, debit card or credit card that you’ll use to fund your share-dealing account.

Finder also has a guide that goes into more detail about how to open a share-dealing account.

Step 3:

Choose the shares you want to buy

To begin with, you should identify companies on the stock market whose shares you want to buy, and then monitor the share performance over time.

When re-evaluating the company before you invest, ask yourself some questions. Has the share price changed since you first looked at it? If so, are you happy to buy it at the new price? It’s worth checking the headlines or recent company announcements to make sure no new risks have emerged. And remember, only invest what you can afford to, as the value of shares can go down as well as up.

In general, if you’re starting out, invest in companies you understand. The latest technology stock may look really good, but do you understand how it makes its money?

Equally, make sure you’re buying for the right reasons – is it because you want exposure to a fast-growing company or just because someone has told you it seems like a good idea?

If you’re a bit wary, maybe try opening a demo account with a provider that lets you use its platform with virtual funds, like Trading 212 or eToro.

Step 4:

Place your order to buy shares

Once you’ve decided which shares to buy, purchasing them is usually the easy bit! If you’re in your online account, you’ll get offered a price and can just click a button to “deal now”. You’ll receive a contract note shortly afterwards.

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.

Step 5:

Pay for the transaction

You’ll need to have sufficient funds in your online share trading account to cover the cost of the transaction, including the brokerage fees that apply.

A bit about dealing charges

Typically, you’ll pay a one-off charge for buying and selling shares. If this is a fixed amount (say £10), it becomes more economical on larger share purchases.

Alternatively, some brokers charge a percentage of the assets that you hold on the platform. You’ll need to crunch the numbers to work out which one of these options is likely to suit you best.

You should also factor in 0.5% of the value of the trade for Stamp Duty Reserve Tax (SDRT).

For a bit of light reading, you can check out our guide to investment fees – which will explain all the industry terms you’re likely to come across.

Step 6:

Monitor the performance of your shares

There are two ways you make money from investing: one is from an increase in the capital value of the shares, the other is when the shares pay dividends.

You’ll need to monitor the performance of your shares, and the frequency with which you monitor them will depend on your investment strategy. For example, if you have a long-term investment strategy, you may only check in and see how your shares are performing every month. If you have a medium-term strategy, it may be a good idea to check each night or each week. Whichever option you choose, you can review the performance of your investments by logging into your online trading account.

You may also want to set limits on your share trades. For example, you could set an automatic sell if the shares lose more than 10% or gain more than 50% of their value. This will limit how much money you can lose, or it may prompt you to sell out when the shares get ahead of themselves.

Step 7:

Sell your shares (if you want to)

When you decide to sell your shares, the process is very similar to the method of buying shares described in Step 4. When you’re logged into your online trading account you’ll be able to select an option to sell your shares at the current market price. You will receive the appropriate confirmation that your stock has been sold, and the revenue from the sale will arrive in your online account.

And that’s it, you now know how to buy shares in the UK! All that’s left to do is put these steps into action and you’ll own shares in a company in no time.

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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