Investing > How to Buy Shares in the UK

How to Buy Shares in the UK

The UK is the world’s sixth-largest economy, and it has a thriving share market. But there are even more reasons to invest in it.

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Updated August 01, 2022

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Put the kettle on – this is going to be one in-depth guide.

Do you want to achieve financial stability? That’s a rhetorical question – of course you do. ✅

But we live in dynamic, uncertain times, and face unprecedented crises. In the midst of all that chaos, it can be hard to plot a course for the future.

The average person in the UK has just shy of £7,000 in savings, and just a little over £1,000 invested. Only 3% of the UK’s population holds their shares in tax-advantaged savings accounts. To say that the British are woefully undereducated about investing might be the understatement of the decade.

But investing is the way to achieve financial security and secure a prosperous future for yourself. The stock market has historically outperformed saving money in a savings account by a huge degree – and even beyond that, investing in shares has the potential to net you huge profits. The economy faced the toughest year in a long time, but the economic recession seems to be grinding to a halt.

However, the world of finance has its own language. Shares, stocks, funds, ISAs, SIPPs, capital gains taxes, dividends, stamp duty – these are terms that can be hard to navigate, especially if you’re just a novice. However, it is crucial that you master all of these terms. We’re going to break it down, and you’ll see that investing isn’t as daunting or inaccessible as it may appear at first.

Investing is a dynamic, interesting, and very rewarding activity. We’re also going to offer some practical, hands-on advice – how to pick stocks, how to find a good stockbroker, and how some of the UK’s most popular stocks have fared in recent years. Let’s get down to business.

What you’ll learn
  • How Buying Shares in the UK Works
  • Different Ways of Investing in Shares
  • Shares You Can Buy in the UK
  • Buying Foreign Shares in the UK
  • Start Trading Shares in the UK
  • Investing in the UK as a Non-Resident
  • Choosing the Right Broker
  • Continue Learning
  • UK Taxes on Trading Shares
  • Finding Stocks on the LSE
  • COVID-19 and the UK Stock Market
  • Buying Shares in the UK: FAQs

How Buying Shares in the UK Works ⚙️

A share is a unit that represents a small amount of ownership in a particular company. Once you own a share, you also own a small part of the business that issued it. The more shares you own, the larger your stake in said company.

Owning shares allows you to participate and vote in a company’s annual meetings, and it also allows you to receive dividends – small, regular payments that businesses give to their shareholders.

But these are more or less secondary concerns. The real reason why people buy shares is to make money. If you buy a share at a certain value, and it ends up increasing in price, you can sell it at a later date for a profit.

And although there is an element of risk involved, as things don’t have to play out like that, historically, the stock market has proven to be a much better investment when compared to savings accounts and the like.

Buying Shares in the UK is Better than Saving Money 💵

As we’ve mentioned, buying and holding shares is far superior to putting your money in a savings account? Why is that?

It’s simple – the APY offered by even the best savings accounts in the UK is unlikely to be much more than 0.50% or 0.60%. With such low figures, any additional money that can be made this way is eaten away by inflation – in fact, you will most likely see a decrease in the actual purchasing power of your money once you withdraw it.

Stocks, on the other hand, offer far superior returns, allowing you to not only resist the effects of inflation but also to profit. Research from Barclays’ annual Equity Gilt Study shows that equities have a 69% chance of outperforming cash when looking at a two-year period. If you widen the investment horizon, and look at a period of 10 years, the odds in favour of equities increase to 91%.

Shares are likely to outperform both bonds and cash savings, no matter how long the investment period is. In 2019, the annual returns of the FTSE 100 amounted to 12.10%. Although 2020 saw a drop of 14.34% due to the COVID-19 pandemic, this has been an unusually bad year – in fact, the worst year for the UK economy in three centuries. However, recent developments hint that the stock market’s performance in 2021 will see a strong recovery.

In general, putting your money in a savings account is only worth it if you need to fund a short-term goal, or if you want to save up for an emergency fund. For all other needs, investing in shares is a much better option. And seeing as how the pound is only getting stronger, you might want to consider entering the market as soon as possible.

The Different Ways of Investing in Shares 👇

There are many ways to invest in the stock market. However, they are generally divided into two approaches, depending on whether they focus on the long-term or the short-term.

Long-term investing is just called investing. It involves finding stocks that you believe will rise in price in the long-term, buying them, and holding them for a longer period of time – usually somewhere in the ballpark of five years. This method of investing in the stock market is also called buy-and-hold investing.

Investing seeks to leverage capital appreciation – the increase in a share’s price. Although the market does occasionally falter and crash, looking at the long-term, the overall share market is profitable. Riding out temporary losses is a key strategy when it comes to long-term investing.

Investing is less stressful, less risky, and generally easier than short-term trading. That is why we recommend that beginners should stick with this approach.

Investors vs Day Traders
The primary differences between long-term investors and short-term traders.

Short-term investing, as we’ve mentioned above, is referred to as trading. Trading seeks to leverage the small-term price fluctuations that happen with all shares in order to make a profit. This method requires buying and selling shares rapidly, and so it implies a much more focused, hands-on experience.

Traders utilize various strategies such as day trading, news trading, and scalping to make profits. However, as these require a lot of practice and experience, we recommend not engaging in stock trading until you become a seasoned investor.

ETFs in the UK 🗂

However, there are ways to invest in the share market other than buying shares. The stock market offers various investment vehicles – and, once you’re comfortable in your knowledge, you should definitely expand your investments to include them.

With shares, things are rather straightforward. You buy a couple of shares in Tesco (TSCO) or Lloyds (LLOY), and depending on how well they perform, you’ve either made a gain or suffered a loss.

Other investment vehicles are more complex. The most important of these are funds – so we’ll cover some basic facts on how funds operate here.

Funds are usually divided into ETFs (exchange-traded funds) and mutual funds. The main difference here is that mutual funds are actively managed by professionals, while ETFs aren’t. ETFs usually follow a particular index and can be traded like stocks, while mutual funds can’t.

Some of the most popular UK-based ETFs include the iShares Core FTSE 100 UCITS ETF, the Vanguard FTSE 250 UCITS ETF, and the iShares Global Clean Energy ETF.

Mutual FUnds vs Stocks
There are several important differences between mutual funds and stocks.

Funds in the United Kingdom Explained 📚

However, in the UK, the situation with funds is a bit more complex. As a UK-based investor, you have access to a variety of funds, including:

Unit trusts, which are actively managed and sold as units. These are open-ended funds, meaning that there is no limit on the number of units that a fund can issue. The price of a unit depends on the asset value of the fund’s investments.

Open-ended investment companies or OEICs function in a similar way, but are registered and run as companies, while a unit trust is…well, a trust. With an OEIC, you buy shares and not units.

Investment trusts work like OEICs, but with a couple of key differences. Investment trusts are public companies, and therefore they are listed on the stock market. They are closed-ended, meaning that they have a limited number of shares.

Some of the most popular funds in the UK include Fundsmith Equity, Baillie Gifford American, and JPM Emerging Markets.

Shares You Can Buy in the UK 🇬🇧

The London Stock Exchange (LSE) is the UK’s premier stock market – but it isn’t the only one.

The LSE’s largest alternative, the Alternative Investment Market (AIM) has 1,254 listings. It functions to meet the needs of smaller-cap companies that need a more flexible approach – and a more flexible regulatory system for trading shares.

The LSE, in contrast, has more than 2,400 listings – and serves as the UK’s go-to stock exchange. So, is the AIM worth considering? Perhaps later down the line, when you’ve become a seasoned investor. Beginners will find everything they need in the LSE – as it offers a great cross-section of all types of stocks.

Speaking of that, what types of shares are there? Shares don’t only differ in price, but in the way that they function. Let’s take a quick look at some of the most popular types of shares available on the LSE.

Growth Stocks 📈

Growth stocks are your classic, bread-and-butter stocks. They operate in the simplest ways – you buy shares in a company expecting them to rise in price. When it comes to growth stocks, identifying the next industry-leaders is crucial. Imagine investing in a famous business such as Apple, Google, or Amazon before everyone else – that is the goal with growth stocks.

However, investing in these shares is far from simple. They might not be very expensive, but it is hard to figure out what companies will and what companies won’t end up as market leaders. This is especially true of tech stocks, which have the potential for huge growth.

Investing in growth stocks comes with a certain amount of risk – if your expectations fail to come true, then the investment may end up costing you money in the long run. However, growth stocks have an important place in any decent investment portfolio.

Value Stocks 💰

Value stocks are shares in companies that are undervalued. A company can be undervalued for any number of reasons – bad press, lower earnings in a quarter, or simply a rough year. However, if you ascertain that the underlying business is sound, using technical and fundamental analysis, then the stock price will bounce back in time.

The logic behind value stocks is simple – you find an undervalued stock and buy it, the price corrects itself after some time, and you’re free to then sell the shares and pocket the difference as profit.

Growth vs Value Stock Characteristics
Growth and value stocks differ in several key ways.

Blue-Chip Stocks 🔵

Blue-chip stocks are stocks that belong to internationally-recognized, high-cap companies that are usually leaders in their respective businesses. These companies are stable, have been in business for a long time, and show consistent earnings.

Blue-chip stocks belong to household names – think Unilever (ULVR), BP (BP), GlaxoSmithKline (GSK), and Diageo (DGE). These stocks can be found in the FTSE 100 index.

However, don’t be fooled into thinking that investing in blue-chip stocks is risk-free – it isn’t. Even large companies make mistakes, and their share prices can drop just the same as with smaller companies. Just recently, the FTSE 100 index saw a small drop due to fears of inflation, for example.

Penny Stocks 🦐

Penny stocks are stocks that belong to unproven, small-cap businesses. There isn’t a universally-accepted definition of what constitutes a penny stock – however, in the UK, the term is generally held to mean stocks that trade for under £1 per share.

Penny stocks are volatile, risky, and prone to huge swings in share price. However, they can be extremely profitable – provided that you know what you are doing. We would counsel beginner investors to stay away from them – penny stocks require years of experience, and shouldn’t even be considered an option until you’ve mastered the more mainstream methods of investing.

Dividend Stocks 💸

Dividends are small payments that companies pay out to shareholders. They can be a one-time thing or a regular occurrence, depending on the company in question.

Many large companies that have high, consistent earnings pay out dividends once a year, or even more often. Some companies even have decades’ long histories of raising their dividends each year. Dividend stocks give you a nice base of passive income. 

In fact, the British tax system has a yearly dividend allowance – which is the amount of dividends that you can accrue each year without being taxed on them. For 2021, the dividend allowance is £2,000 – although it used to be £5,000 just a couple of years ago. Some recent events regarding dividends suggest that they are likely to perform well for the rest of the year.

Buying Foreign Shares from the UK 🌎

The LSE is a large stock exchange, full of interesting opportunities – but you shouldn’t narrow your horizons. It is quite possible – easy, in fact, to invest in foreign shares from the UK.

Access to the NYSE, NASDAQ, and other international stock exchanges allows you to diversify more easily and will allow you to access some of the most talked-about stocks in the world. So, how do you go about buying foreign shares?

It’s simple – you have two choices. Either you can use an international broker, as they offer access to global markets, or use a UK-based broker and trade foreign shares indirectly by using CFDs.

So, are these two approaches more or less the same? No – in fact, they’re quite different. CFDs are complicated, risky investments – beginners shouldn’t even try to make money this way, and even most seasoned investors take on huge risks when they trade CFDs. Because of this, we recommend staying away from this type of investing.

While some UK-based brokers do offer access to US stocks, recent events, such as Freetrade halting purchases of US stocks raises the question of whether they are reliable or not. For now, we would steer clear of buying foreign shares this way.

International brokers, on the other hand, operate in the same way as UK-based brokers do. The idea of investing in foreign markets might seem intimidating to you if you’re a beginner – but there’s no reason to worry. A lot of international brokers, such as TradeStation, are quite beginner-friendly and accessible while still allowing you to trade foreign shares. 

While we can’t say for certain whether or not international brokers are the way to go for you, the fact that they offer access to other stock exchanges is a big advantage in their favour.

How to Start Trading Shares in the UK 🏁

Before you can actually get down to trading shares on the LSE, you’re going to have to take care of a couple of things first.

First, you’re going to need to open a brokerage account. Although it is possible to buy shares in the UK without using a broker, it is far too impractical for most purposes. Thankfully, the account application process can be done entirely online and isn’t too time-consuming. Waiting for your account to get approved, however, can take up to a fortnight.

To jump straight into it, eToro and Interactive Brokers are both very popular in the UK. eToro has a copytrading feature which is incredibly popular among new traders. Interactive Brokers has powerful tools and technology that veteran traders love:

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eToro Risk Warning: Your capital is at risk. Other fees apply. For more information, visit etoro.com/trading/fees.

Opening an account doesn’t cost anything – however, make sure to check out a broker’s fee schedule before committing. When opening an account, you’re going to have to submit the following documents:

  • Proof of identity (Passport, ID card, or Drivers License)
  • Proof Address (A bank statement, tax invoice, or utility bill no older than three months)
  • National Insurance Number
  • Debit card and/or bank details

Learn How the London Stock Exchange and the FCA Work

The LSE is the UK’s largest stock market. It was founded in 1801 and will celebrate its 220th birthday on the 30th of December 2021. It has over 2000 companies listed on it, and it is open from Monday to Friday, 8:00AM to 4:30PM, excluding certain holidays.

The Financial Conduct Authority (FCA) is the UK’s financial conduct regulator. Its goal is to guarantee transparency, security, and fair competition in the market. The FCA also devises the regulations that companies, including stock brokers, have to meet in order to do business.

The Financial Services Compensation Scheme (FSCS) is a body appointed and administered by the FCA. It serves to provide investors with insurance in the case of brokerages going bankrupt. Since 2001, it has paid out more than £26 billion to more than 4.5 million investors.

Investing in the British Stock Market as a Non-Resident 🛂

There are no legal limitations on non-residents investing in the UK stock market – and this goes for both UK citizens who are non-residents and foreign nationals. However, most UK-based brokers require that you be a resident when opening an account, due to various money laundering regulations.

This small fact brings a large headache for expats and non-residents. You can easily open an account with a broker when you are a resident, and then move out – you will retain full use of your account. Some UK-based brokers do not require you to be a resident – but they are few and far between.

A much easier way to invest in the British stock market as a non-resident is to open an account with an international broker, thus avoiding most of this regulatory bramble.

In fact, the UK has some of the highest percentages of foreigners investing in its markets in the world. Non-residents will be subject to a different set of taxes than residents, but we’ll go into detail regarding taxes later in this guide.

Buying Shares in the UK Through a Broker 🤝

As we’ve mentioned before, it is possible to buy shares without a broker in the UK – however, you don’t want to do this. Why? It’s simple – you’ll have to open separate accounts for each stock that you want to invest in, and you won’t have control over the date of purchase – meaning that you don’t have a clear view of how many shares you’re going to end up with.

On the other hand, buying shares through a broker saves you from all those pesky complications. If you use a broker, there are fees that have to be paid, yes – but these fees are far outweighed by the convenience that you’re afforded.

So, what are stock brokers, exactly? Stock brokers are companies that connect investors with stock exchanges, like the LSE. They also link buy order and sell orders, allowing business to flow smoothly and without interruption – all the while guaranteeing a lower price of doing business.

Brokerages fall into one of two categories: full-service brokers and discount brokers. Both have their pros and cons – so let’s take a short look at what they are.

Full-service brokers are the more expensive option. They generally charge a commission for each trade executed and have much steeper minimum investment requirements. However, if you can afford such a service, it comes with various benefits – a wide array of educational resources and research, retirement planning, wealth management, and financial advisors, to name a few.

Discount brokers, on the other hand, are far more affordable. They charge a flat fee per transaction and have much lower minimum investment requirements. However, they don’t offer the wide array of services that full-service brokers do – but they can be just as profitable, provided that you take the time to learn about researching stocks properly.

Choosing the Right Broker in the UK ✅

Ready to begin investing? If you’ve set aside some money, read up on the basics of investing in the stock market and researching stocks, and figured out what type of investing strategy suits you, the next step is opening a brokerage account.

But of course, you’re going to have to pick a broker first. This can be a bit tough if you don’t know what to look for – but we’re going to give you a helping hand. Here are the 4 most important points to consider when choosing a brokerage.

Affordability, FCA Regulation, and Security 🔒

Price is the first factor that you should consider. As a rule of thumb, UK brokerages charge account maintenance fees – although this isn’t standard practice abroad. This means that whatever broker you choose, you will have to pay something akin to an annual or monthly subscription fee.

If your budget is limited, that account maintenance fee can easily eat away at your profits. Make sure that you pick a broker that is within your means. Another point to consider is the minimum investment requirement – UK brokers generally require you to invest at least £100 to open an account.

Make sure to pay attention to the other fees that brokerages charge. Stamp duty is universal, but brokerages have varying fee structures. If you can’t afford a broker, don’t open an account with them – dipping into your savings is never a wise strategy. Make sure to also pay attention to the commissions that a broker charges.

Brokers vs Traders
A breakdown of the associated costs of trading.

The next thing to consider is whether or not the broker in question is regulated by the appropriate regulatory bodies. In the case of the UK, that is the FCA. If a broker isn’t regulated by the FCA, give it a wide berth – there is no reason to use shady, unregulated brokers.

The FCA guarantees that a brokerage does business fairly, transparently, and within the boundaries of the law. If a brokerage isn’t FCA-approved, there is good reason to be suspicious about their motives.

Last but not least, consider the security measures that a broker offers. Does it offer FSCS protection? What sort of encryption does the brokerage use, and does it support good safety measures such as two-factor authentication? All of these questions should play a part in making a final choice regarding a broker.

Investment Offerings and Access to Other Markets 💼

After affordability and safety, consider the range of investments that a broker offers. Does the broker support the purchase of securities other than stocks? Although you might not be thinking about them right now, other types of securities are extremely important when it comes to building a well-balanced portfolio.

To put it simply, it is impossible to properly diversify without branching out into other securities. Diversification shields your investments in case of an economic downturn. While you should focus on buying stocks for the beginning, you will invariably have to branch out into other investment vehicles such as bonds, ETFs, funds, and cryptocurrency later on.

The same goes for foreign markets. The LSE regularly lists new businesses, such as the recent listing of Napster – but why stop there? Access to foreign stock exchanges can allow you to easily diversify across the globe and will give you access to some of the world’s most sought-after stocks.

Ease of Use, Platform, and Mobile App Support 👨‍💻

If a brokerage is regulated, safe, affordable, and offers you a wide enough variety of securities, then the next topic on the list is user experience.

Learning how to navigate the world of trading shares is not easy. Stock tickers, stock charts, technical indicators – all of these take time and effort to learn and fully absorb. You don’t want to choose a brokerage that works against you. Instead, you want to find a broker that is as user-friendly as possible.

The biggest factor here is the broker’s platform. Nowadays, brokers typically offer three types of platforms – desktop platforms, online platforms, and smartphone apps. While a lot of brokers use the industry-standard MT4 and MT5 platforms that are proven beyond the shadow of a doubt, a lot of brokerages have their own proprietary platforms. 

When trying to find the top trading platform in the UK, you face a difficult balancing act – you’re looking for something that is easy to use, yet offers enough complexity and features to accommodate your needs as you grow and advance as an investor.

Thankfully, most brokerages offer demo accounts, which allow you to test-run their platforms without actually risking any money. We always recommend trying a platform out with a demo or paper trading account before committing to any broker.

Pay close attention to a brokerage’s mobile app support. In today’s day and age of rapid news and information flow, being able to react at a moment’s notice is a priceless boon – even if you’re a long-term investor. A good UK stock trading app is essential to a good user experience.

Customer Support 🔎

Although you might think that customer support can be treated as an afterthought when it comes to picking a broker, it can’t. When it comes to trading shares, you can’t always expect smooth sailing. Mistakes, accidents, and problematic issues do arise from time to time – and when they do, you want to know that you can rely on your broker to handle them quickly and efficiently.

A good customer support team is responsive, helpful, and easy to reach. When picking brokerage, try to find out when their CS team is available, how they can be reached, and how long the waiting times usually are.

Learn about Buying Shares in Britain 🎓

Trading shares is a skill – and like any other skill, it takes years to master. However, take the time to focus on your education as an investor, and work hard, you will master trading.

But knowing where to turn to, as far as sources go, can be a bother. It comes as no surprise that the internet is full of resources regarding investing – but not all of them are trustworthy and reliable.

So, how do you tell good sources apart from bad ones? Anything that promises an easy way to get rich quick is a scam. On the other hand, credible sources will stress that learning how to invest takes time, patience and that there is always an element of risk involved.

The easiest way to get acquainted with trading is by simply opening a brokerage account. Brokerages offer their own research and educational materials and allow you to get a hands-on feel for investing.

But that doesn’t mean that we recommend that you should just jump right into buying shares without preparation. One of the biggest boons of stock brokerages is that they offer paper trading accounts – demo accounts that allow you to try out investing with virtual money.

Paper trading accounts allow you to test strategies, figure out what works and what doesn’t, and get a sense of how well you would perform if you were to start investing right now. They also allow you to familiarize yourself with a broker’s platform before making a final decision.

There are a lot of beginner-friendly brokers out there. However, we have to single out eToro here – it’s one of the most popular brokerages in the UK, offers great educational materials, a user-friendly platform, as well as a unique copy-trading feature that allows you to copy the trades that seasoned investors are making.

Taxes on Trading Shares in Britain 🧾

You will have to pay taxes when trading shares in the UK. Some can’t be avoided, but others can – we’re going to break it down for you in this section in simple terms.

When you buy shares, you’re going to have to pay a tax that amounts to 0.5% – this is called the Stamp Duty Reserve Tax (SDRT). This does not apply to shares in OEICs and units in unit trusts, however.

Capital Gains Tax and Tax-Free Allowances 💰

First of all, every UK citizen has an annual capital gains tax-free allowance. Put simply, you can earn a certain amount of money via capital gains each year without paying tax on it. For 2021, that amount is £12,300 – which is quite a nice sum. You can also deduct certain costs from your total gains – including fees and SDRT.

On top of that, you do not pay taxes if the shares you sell are in a stocks & shares ISA, a personal equity plan (PEP), a self-invested personal pension wrapper (SIPP), or if they are a part of your employer’s share incentive plan (SIP).

We recommend maxing out your ISA first – you pay nothing in income tax, capital gains tax, and dividend tax on shares that are held in an ISA. The current ISA limit is £20,000 each year, and you should make maxing your ISA out your first priority.

Capital Gains Tax RateIncome Band
10%Basic rate - £12,501 to £50,000
20%Higher and Additional rate - Over £50,000

You can also reduce your tax bill by deducting losses from your total taxable gains. If your total taxable gains still exceed the annual tax-free allowance, you can also deduct unused losses from previous years.

Dividends Tax

So, what about dividends? The UK’s tax system also has a tax-free personal allowance for dividends, which amounts to £2,000. Once you earn more than £2,000 via dividends, they will be taxed at one of three rates, depending on your tax band.

Tax Band and IncomeDividend Tax Rate
Basic rate - £12,501 to £50,0007.5%
Higher rate - £50,001 to £150,00032.5%
Additional rate - over £150,00038.1%

Taxes for Non-Resident Investors 

Unfortunately, non-resident investors cannot make use of ISAs. However, as a non-resident, you might not be liable for paying capital gains tax – that is, unless, you return to the UK within five years.

How to Find Good Stocks on the LSE 🚀

Once all is said and done, and you’ve opened and funded an account, picked a strategy, the question still remains – what stocks should I invest in?

To start off with, try investing in what you’re familiar with. If you have work experience in a certain industry, you are already familiar with the state of the market – who the established players are, and who the up-and-comers and challengers are. You also understand companies in that sector operate and have a much better idea of their long-term and short-term prospects.

Familiarize yourself with technical and fundamental analysis. Both of them will allow you to analyze stocks in a much more meaningful way. This will help you find both promising stocks and stocks that are undervalued.

With the exception of dividends, all strategies that focus on investing in stocks depend on the same principle – capital appreciation, or an increase in share price. It is much easier to see the worth of your shares go up if they were undervalued to begin with. A good way to start doing this is by investing in some stock analysis software.

If you think a company’s shares are undervalued, don’t rush in before buying them. Not everything that seems like a bargain is a good deal. However, if you find shares that are trading for small amounts, and belong to companies that will recover or continue to do well in the future – that might be a good opportunity. 

The UK economy has seen a large contraction – but many businesses will survive this turmoil, and there is profit to be made in buying their shares during this crisis. In fact, the Bank of England is quite optimistic that the UK might avoid a second recession.

Diversification 🗃

When buying shares, it is incredibly important to diversify. Diversification means spreading your investments across sectors, industries, and different types of securities in order to shield yourself from risk.

If you invest all of your money into a single industry or company, when it faces economic downturns, you will see disastrous losses. If, however, you’re properly diversified, that loss won’t be so keenly felt – and the safety net of your other investments might give you enough time to ride out market lows.

When it comes to shares, always aim to incorporate a mix of stocks that are going to perform well in the long-term, stocks that have high growth potential but also represent a degree of risk, as well as some defensive buys – stocks that likely won’t change much in price, but which represent a safety net for your overall portfolio.

After you’ve accrued a well-diversified stock portfolio, it will be time to invest in other securities. ETFs, mutual funds, bonds, and cryptocurrency all have their pros and cons – but diversification across asset classes is non-negotiable.

Are Popular UK Stocks a Good Investment?

So, how have some of the UK’s most popular stocks fared over the last couple of years? Let’s look at a few concrete examples, and then compare the situation to other popular stock exchanges.

Unilever (ULVR), a renowned British consumer goods company, has seen returns of 23.1% when looking at the last five years. Tesco (TSCO) has shown similar gains during the same period, amounting to 25.84%.

Diageo, which owns many famous alcoholic beverage brands, fared slightly better – with returns of 54.46% in the last five years. However, not all popular UK stocks have fared so well – with Lloyds (LLOY) exhibiting losses of 44.49% in the same period.

Every now and again, we come across a success story. Such is the case with Premier Foods (PFD), which has netted investors a return of 188.57% in the last five years and has used the added capital to significantly cut their debts.

So, how does the performance of the LSE compare to the two most popular U.S. stock exchanges, the NYSE and NASDAQ? Well, to put it simply, the indices that track the performance of the US stock market show that it is outperforming the UK’s markets – however, there is no reason to be alarmed or jump ship. 

One must remember that the UK is still trying to navigate the realities of its post-Brexit place in the global economy. There are plenty of promising omens as far as the economy goes – so we’ll see who will have the last laugh in the years to come.

The British Stock Market During Covid-19—What Stocks Did Well

As far as the LSE goes, trends that held true worldwide also held true in the UK regarding stocks and the pandemic. Industries such as energy, the automobile industry, and airlines have been hit pretty hard – while other industries, such as health, food, and telecommunications saw great gains during the same time.

For example, BATM Advanced Communications (BVC), a telecommunications company, has seen a return of 163.89% in the last year. Cineworld Group (CINE), a cinema company, saw losses of 38.32% in the same period of time. Airlines, such as International Consolidated Airlines (IAG), also aren’t faring well – with IAG reporting losses of 50.76% in the last year.

However, things are looking up. Tullow Oil (TLW), a company in the energy sector, is currently at 17.86% as far as returns go. Halfords (HFD) has shown even more impressive returns, despite being both a retailer and a part of the automobile industry – with returns of 99.93% when looking at a one-year period.

The same may follow for the other industries that have been hit particularly hard as of late. Recent news, such as the vaccine rollout, and the UK’s recently announced roadmap to ending lockdown might bring back investors’ confidence, but for now, investors are still cautious – let’s just hope those plans work.

Buying Shares in the UK: FAQs

  • What Time Does the UK Stock Market Open?

    The LSE is open Monday through Friday, beginning at 8:00AM and ending at 4:30PM.

  • What is the Easiest Way to Buy Shares in the UK?

    The easiest way to buy shares is to open an account with a reputable online brokerage. The application process can be completed within a day, and the process of buying shares itself isn’t too complicated.

  • How Can I Buy Shares in Amazon from the UK?

    In order to buy Amazon shares in the UK, you will either have to purchase shares from the company’s secondary listing on the LSE (ticker 0R10) or use an international broker that has access to the NASDAQ stock exchange where the company offers its primary listing (ticker AMZN).

  • How can I Buy Rolls Royce Shares from the UK?

    Rolls Royce, the famous car manufacturer, is a subsidiary of BMW - whose shares you can buy on the Frankfurt Stock Exchange. Another company with a similar name exists - Rolls Royce holdings, and it is traded on the LSE under the ticker RR. However, it is an aerospace and defence company.

  • Is Online Trading Safe in the UK?

    Online trading is very safe, provided that you utilize the services of a reputable broker. There are numerous regulations and standards that FCA-regulated brokers have to comply with, and customers are also afforded additional security via FSCS insurance.

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