According to Companies House records, there are millions of companies registered in the UK alone, and even more worldwide. With some companies, you can invest in them by buying shares listed on a stock exchange. But there are others that you won\u2019t be able to invest in as easily, or at all. Here\u2019s why.<\/p>
First things first: what does it mean to invest in a company? For the purposes of this article, we\u2019re going to define that as buying a share of an individual company, such that you own part of it, with the expectation of making money by doing so. As with any investment, there\u2019s no guarantee of returns, but that\u2019s typically the plan.<\/p>
By that definition, you can only invest in companies that allow you to own part of them. Or, as they\u2019re officially known, companies that are \u201climited by shares\u201d. These are usually businesses that make a profit, where the company is legally separate from the people that own it and has separate finances from its owners. We\u2019ll come onto the type of companies to which these criteria don\u2019t apply a bit later.<\/p>
Companies limited by shares broadly break down into 2 types:<\/p>
Investing in a PLC is relatively straightforward, as you can easily buy and sell PLC shares on stock exchanges, either through a traditional stockbroker or using an online share trading platform<\/a>.<\/p> Investing in a private limited company, while not always impossible, is both trickier and riskier. Given that even buying publicly traded shares is seen as riskier than some other forms of investing \u2013 such as exchange traded funds<\/a> (ETFs) \u2013 investing in private limited companies is really a venture for experienced, wealthy investors.<\/p> We\u2019ll come back to how to invest in public vs private limited companies shortly. For now, let\u2019s outline the types of company that aren\u2019t open for investment as most people understand it \u2013 so putting money into a company with an expectation (or at least a hope) of return on your investment. You can\u2019t invest in:<\/p> If the company you want to invest in is a public limited company (PLC), then the process for doing so should be pretty straightforward. PLCs can sell company shares to the public by listing them on a stock exchange, such as the London Stock Exchange<\/a>. So investing in the company simply involves buying shares from one of these exchanges.<\/p> To buy shares, you\u2019ll need to use either a traditional stock broker that works face-to-face or by phone or, as is becoming more common these days, register with an online share dealing platform. These let you view the shares on offer, make purchases on an \u201cexecution-only\u201d basis (this means you get no advice on which shares to buy) and keep track of your investments.<\/p> Of course, you\u2019ll need to have done your research into which companies you want to buy shares in, which is worth spending a bit of time on, but the actual transaction should be pretty quick. Most trading platforms charge a fee for buying (and selling) shares, so you\u2019ll need to factor this in.<\/p> Our full guide to buying shares in a company<\/a> breaks down the process in more detail.<\/p>What types of company can I not invest in?<\/h3>
How do I invest in public companies?<\/h3>
Our top picks for where to buy shares<\/h4>\n\n\n\n