How to buy shares online in 2021
This page explains everything you need to know about stocks and the stock market. Learn what to look out for when you choose a broker, the different ways to invest, and whether you should jump in now – then get some tips on how to buy your very first share.
Compare the best platforms to invest in shares
You can use any one of the brokers below if you’re looking to buy straight away. All the platforms in this list have been assessed and reviewed by our team of experts. If you’re not ready to buy, then scroll down to follow our step-by-step guide.
What is a share?
A share is a unit of ownership in a company. Shares (also known as stocks) are bought and sold on the stock market where the prices rise and fall in relation to how the company performs.
Companies issue shares as a way of raising money, giving up part of the business in exchange for funds to run their operations. For your part, handing over some money (the price of the share) means you get to own a bit of the business.
How does the stock market work?
The stock market works as a marketplace where buyers and sellers come together to exchange shares. The phrase ‘the stock market’ is used to refer to the world of global finance as a whole, but in fact it is built up of a network of different stock markets around the world.
The price of each share fluctuates based on supply and demand. Anyone can buy shares on a specific stock market and generally they’re used as a way of growing wealth in the future. Ideally, you want to pick stocks from good companies that increase in value over time so you can make a profit when selling them.
If you want to learn more about how it works, use our guide to the stock market, otherwise keep reading for a quick guide to buying shares.
How to buy shares for beginners
Regardless of which shares you’re buying, the process is simple. If you follow the steps below, you’re going to be able to buy the stock you want quickly and easily.
- Choose a broker. To buy shares, you need a broker. A broker is just a merchant for buying and selling shares. All of the options listed on this page are ideal for beginners and some offer more advanced features for when you’re a bit more experienced.
- Create an account & deposit funds. Once you’ve chosen a broker, create an account and deposit some money. You can often get started with as little as £100.
- Choose a company to invest in. Do you want to invest in big names like Facebook or Google? Or are you looking for stocks in a particular industry? We have lots of resources that you can use to help you decide which shares to buy.
- Make your first investment. Now that you’ve chosen a broker, signed up, and chosen what you want to invest in, you’re ready to enter the stock market. On your broker’s website or app, search for the stock using its ticker symbol (AMZN or GOOGL, for example). You’ll be taken to a page that looks a bit like a checkout for when you buy anything else online, here you enter the number of shares you want to buy or the amount you want to invest and click ‘buy’.
When it comes to selling your shares, it’s exactly the same but you click ‘sell’ instead. And remember that this is just the basics, there’s a lot more to think about if you want to build up a portfolio; like how much to invest, how long for, and which companies to choose. We’re going to help you answer all those questions right here.
Investing vs trading
There are two different strategies for buying shares. The biggest difference between them is the timeframe: investors have more of a long term view, while traders focus on the short term. They aren’t mutually exclusive, and many people choose to do both at the same time.
The best strategy for you depends on how soon you want to see returns, the amount of time you want to put into managing your portfolio, and your attitude to risk. To help you decide which option you want to give more attention to, here’s a quick summary of each one.
Investing is best for beginners and anyone who wants to build wealth over the long term. If you’re thinking about the future then the stock market tends to offer up better returns than a savings account. It can do much better if you pick some good stocks: a share in Amazon cost a little over $1 in 1997 and is now worth more than $3000.
The theme of investing like this is patience and sticking to a plan. The best way to beat the market is spending small amounts over a long period of time and not overreacting to small price changes. You want to focus on the fundamentals of a company, such as its finances and future prospects, and you can reduce the risk of one stock going wrong by investing in lots across different industries.
When you’re investing long term the time frame for returns is measured in years rather than weeks. You don’t need to dedicate time to micromanaging your portfolio every day and you should be more concerned about the stock price in six months or a year rather than what it is today.
Trading means buying and selling shares quickly to take advantage of small changes in the price. The time frame for seeing returns is much shorter than when you invest, the idea being to trade a lot of shares and make a small profit each time.
The most common way to trade is to use something known as a contract for difference (CFDs). With a CFD you speculate on the price of a share rather than owning it yourself. This means you can bet on a share price to go down as well as up, but don’t get any of the benefits of owning the stock.
Instead of basing your decisions on the fundamental performance of a company, when you trade you use trading patterns to help you. These patterns give you clues on when to buy or sell a stock. It can take time to fully understand technical analysis and how to trade successfully, so we advise beginners to steer clear until you have more experience.
Top tips for investing in stocks
Long term investing is the best way to get started on the stock market. It’s less risky than trading for beginners and you can drip feed money into your favourite companies over time. Here are our top tips for how build your own portfolio:
- Figure out your budget. You can get started with virtually any amount of money but the size of your budget affects how you should invest it. If it’s less than £1000, you might be better off buying one or two shares in established companies or even investing a fixed amount in an index tracking fund every month. If it’s more, you can invest in a wider range of shares.
- Consider how soon you want to see returns. How quickly you want to generate profits will impact your investment strategy. In general, you should be looking far into the future and trying to turn £1,000 into £10,000 over many years. You can make money faster if you invest in small-cap or growth stocks that hit big, but that means taking on more risk.
- Decide how much risk is too much. Large companies are usually safer investments than small ones because they’re less influenced by market volatility. This means you can minimise risk by investing in blue-chip companies – ideally buying shares in more than one so you’re not overly exposed to one company’s performance. Deciding how much of your portfolio to spend on larger companies is a good way of choosing an acceptable level of risk.
- Research the stocks you want to buy. You might already know which stocks you want to buy, or you might be looking for the right opportunity. Either way, it’s important to do your research. Look into each company’s past performance and plans for growth before investing, and make sure you understand the difference between different types of stock to help build a balanced portfolio.
- Create a plan and stick to it. The stock market can be a bumpy ride. You need to have a long term plan so that you don’t overreact to every good or bad day and are prepared for extreme events. Sometimes it’s right to sell and take a loss, but even a market crash (like the one caused by the COVID-19 pandemic) can be an opportunity if you keep money aside to buy stocks when prices are lower.
- Start investing gradually. It’s a good idea to start with small purchases until you have more experience. If your budget is £100, think about only spending £10 or £20 at a time. You never want to put all your money in one stock, and spreading out investments over time can be a good way to balance out short term volatility.
And while it’s not worthy of a top investing tip, a good broker can make or break your investing experience, especially in terms of the fees they charge, or the speed to react to the market. We’ve covered this in more detail below.
How to choose a broker
Selecting a broker is one of the most crucial parts of getting started on the stock market. They handle your money, decide how expensive it is to invest, and you’re going to be doing a lot of your work from within their platform. Here’s what to look out for when you choose one:
- Ease of use. You want a broker that makes it easy to buy and sell. An intuitive interface is a must, especially if you’re new to buying stocks. Choosing one with a good mobile app is important if you want to be able to access your portfolio from anywhere.
- Range of stocks available. You don’t want any restrictions on your trading. Some brokers limit you to a particular stock exchange or only offer trading on the biggest companies. If you’re going to be looking for undervalued or less popular stocks, make sure you pick a broker that lets you find them.
- Fees and commissions. Brokers make money by charging you for certain actions. Often you have to pay a fee on each trade or to deposit or withdraw money. If you’re going to be an active trader, look for a broker with low (or no) trading fees.
- Payment methods available. Most brokers will accept deposits via debit card or bank transfer. If you want to pay using another method – like PayPal – it might not be available at all in some places so check before you sign up.
- Reputation and regulation. You want to be confident that you’re protected if anything goes wrong. Pick a broker that’s regulated by the financial authorities in your country and have a read around to get a feel for its reputation – our reviews can help you.
- Customer service. You never know when you might need help on things like accessing your money or your account itself. When your money’s at stake, don’t tolerate bad customer service. It’s another area where research is a good idea, that way you can see if other people have horror stories that can help you steer clear.
There’s a lot to take in when you dive into the stock market and it’s a good move to take time to think it through. If you haven’t made a decision over whether to get involved yet, here’s a quick summary of the pros and cons, then some more questions to help you decide.
- You can build your wealth in the long run
- The stock market can offer better returns than a low interest savings account
- Your knowledge of specific industries or companies can be a big help when picking stocks
- Being a shareholder can entitle you to dividends
- Trading can be a risky business, especially for beginners
- You can lose money as well as make money
- Lots of things in the stock market are outside of your control
Before you make a final decision on whether to invest in stocks, let our answers to these three questions guide you.
1. Is it a good time to buy shares?
It depends on the company, especially if you’re a long term investor. There are times when wider market forces come into play and the majority of stocks are trending up or down (known as bull and bear markets, respectively). Even then, some types of stock grow more slowly in the boom times but are more resilient when the going gets tough.
The important thing is research. If you’re interested in Tesla, for example, then you might want to think about who its competitors are and whether there are any developments on the way that could affect its prospects. For Tesla that could mean it unveiling a new car, or opening a new factory to build more. Use the latest news in the market to help you:
China slaps Alibaba a record £2.0 billion fine on anti-monopoly violations
Up or down? Toyota price prediction for April
Vonage Holdings shares are down 3.9% YTD. Should I invest?
2. Do you know which companies you want to invest in?
If you already have a good idea of what you want, great. If it’s a big name like Apple, Disney, or Microsoft, then these stocks are some of the most popular, so they’re also quite expensive. As a general rule, you have to decide on a trade-off between price and risk, large-cap stocks are usually (although not always) the safest.
If you don’t know what to buy yet, then the legendary investor Warren Buffett has some advice for you. He once proclaimed that you should ‘invest in what you know’. This can be a good place to start. If you know an industry well, from professional experience or just a personal interest, use that to your advantage.
You should also use your own research to supplement what you already know. You can dive into new industries to look for investment ideas, or look into the competitors of the companies you’ve already picked out. That way you can get a good feel for which ones are likely to perform better. The latest market analysis can help too, so you don’t miss out on anything you need to know:
Is Uber stock a buy right now?
5G: Nokia stock price analysis for April
Oracle shares continue to trade near record levels. Here are the next targets
3. Do you want to hold stocks for the long term?
It’s the best way to build wealth as an investor. You can pick stocks and leave them to grow in value over time, without needing to check in every day. If you want to be a fast-paced trader, then that’s a very different strategy where you want to get in and out of stocks quickly. Finally, here are a couple of pointers for whichever method you choose.
Considerations for a long term investment strategy
If you’ve done your research and feel confident a stock is going to increase in value, you want to buy some of its shares. Decide how much of your money you want to invest in this one stock (ideally you want to invest in multiple stocks to minimise risk) and then find a broker to buy it with.
Considerations for a short term investment strategy
Trading is a very different skill. If you’re happy with the risk and feel like you have the right temperament to do it well, then you should pick a broker that charges low trading fees to get started. You want to learn all about how to analyse trading patterns as well.