How to buy shares in the UK

Keen to get started investing? Great decision – your future self will thank you! However, it can be a minefield out there, in the complicated world of investing. But don’t worry, we’ve got you covered. Here’s how to buy shares in the UK in just 3 easy steps.

Step 1 – find the right investment platform for you

Do you want to invest in general, or are you looking to buy specific shares of a company?

If you’re new to investing, or even a bit of a seasoned pro, we recommend letting the experts handle most of your investing. They know what they’re doing and have lots of experience growing people’s money over time. They’ll use the right investment strategies and put the right investment portfolio (the investments you have) together to suit your investing goals – which is normally long-term growth over time.

However, we don’t mean using a financial advisor. We mean using an expert-managed investment platform. There's some super easy ones to use, and you’ll pick from a few options such as how much risk you’d like to take with your money – from low risk to higher risk. 

Don’t let the word risk put you off, it simply means the investment strategy the experts use. With a higher risk option, the goal is to grow your money more in the long-term, but there could be bigger ups-and-downs in the short-term (over a few years). With a lower risk strategy, there will be fewer ups-and-downs in the short-term but your money will grow slower in the long term.

If you’re young(ish), it’s often a good idea to have a higher risk investment strategy to grow your money more over time, and ride out the ups-and-downs – as you won’t be needing the money any time soon. If you’re a bit older, and nearing retirement, it can be a better idea to opt for a lower risk strategy, as you might want to use the cash sooner.

So, if you want to let the experts handle things, you’ll need to get an expert-managed investment platform.

Or, if you’d still like to buy shares yourself, you’ll need to use a self-managed investment platform – there’s lots of names for these, such as a share dealing platform. But, they’re all stock brokers, which are companies that buy and sell stocks and shares for you (and hold them in your own account).

Either way, we’ve reviewed all the best investment platforms out there and come up with the best investment platforms. And here they are:

Best expert-managed investment platforms

Best stock brokers

Buy shares and make your own investments.

Step 2 - invest and buy shares

If you’ve decided to use an expert-managed investment platform, you wont need to do much. The experts will take care of everything, all you need to do is sign up, and add your money. We recommend making regular payments, and over time your money should grow and grow. Don’t forget, investing is for the long term, so there will be ups-and-downs along the way. The key is to not take your money out, keep investing it over time.

If you’re looking to buy shares yourself, once you’re all set up on a self-managed investment platform, or a stock broker, look for the shares you’d like to buy on the platform.

It's worth mentioning, not all stock brokers have the same companies listed (to buy their shares). The investment platforms we’ve recommended have some of the largest range of stocks and shares you can get – some other brokers have a much smaller range.

Note: you can only buy shares in companies that are publicly traded. That means they’re listed on a stock exchange (such as the London Stock Exchange (LSE)). Lots of companies are private, and so you cannot buy their shares.

Step 3 - building your investment portfolio

Pretty simple right? Just 2 steps to buy shares and investments!

The hard bit is building your portfolio and managing it over time (your portfolio is just another word for your investments).

Ideally, you’ll have a long-term focused, diversified portfolio that covers a wide range of investments, and types of investments (such as shares, ETFs, bonds, property – more on those below), so you have the right balance for long-term growth.

A small range of investments can mean your portfolio might not perform well if one type of investment, or group of investments, performs badly. For instance, if the energy industry performed badly in the future (if the share prices of energy companies fell, or didn’t grow as much as others), and you had most of your money in them, your portfolio won't grow as much as you’d like.

Ideally, you’ll most likely want to follow the right investment strategy that builds a well diversified portfolio for long-term growth over time, and is assessed regularly and changes made if needed. 

Buying shares in a single company without being part of an well-rounded investment portfolio is often not a great investment strategy for long-term growth.

That’s why we recommend simply letting the experts handle things for you. It makes it far easier – you don’t have to do much! You can be sure your money is in the right investment strategy and growing over time. 

Investing yourself can be hard, and you need to spend a lot of time and effort learning about investing too. Why not simply let the experts handle it, and spend your time enjoying life with your friends and family?

Alternatively, use a ready-made investment portfolio that the experts manage, and buy shares that you’d like separately – the best of both worlds!

We highly recommend Moneyfarm¹ as an expert-managed investment platform. We've done the research and they're the best performing Stocks and Shares ISA, have low fees, and expert advisors on hand to help you with any questions you might have.

You can also check out the best investment platforms to view all of your options – you’ll find self-managed investment platforms there as well – making it easy to buy shares and make your own investments. We recommend eToro¹ if you’re new to that too – it’s low cost and easy to use.

Nuts About Money tip: if you’re looking to buy and sell shares within a short period of time (called trading) – there’s better investment platforms for that. Here’s the best trading platforms to learn more.

Types of investments

There’s lots of different investments out there, much more than just shares. Let’s take a quick look at the most common types:

Stocks and shares (equities)

This is where you buy part of a business, a share of the company. These can rise in value if the company does well, and can pay out their profits to shareholders (called dividends).

Exchange-traded funds (ETFs)

These are groups of shares and other investments all pooled together into a single investment, so it’s super easy to buy and you don't have to buy lots of different investments. For instance, technology companies or green energy companies. ETFs can be bought and sold on stock exchanges, just like shares.

Bonds

These are where you loan your money to a government or large corporation in return for interest. Typically seen as lower risk.

Property

This is typically commercial property that pays rent (an income).

Buying shares in a Stocks & Shares ISA

The best thing about buying shares in the UK, is that you can invest within a Stocks & Share ISA (also called an investment ISA). This is where everything you make is completely tax-free, forever!

So you won’t pay any Capital Gains Tax, Income Tax, or Dividend Tax on any of the money you make within your Stocks and Shares ISA. These are taxes you could otherwise pay if your investments grow in value or provide an income (lots of companies pay out their profits to their shareholders – called dividends).

You can invest up to £20,000 each tax year, which runs from April 6th to April 5th the following year. This is called your annual ISA allowance – and is shared across all the different types of ISAs, such as a Cash ISA (for cash savings) and a Lifetime ISA (to save for your first home) too.

However, you can only pay into one Stocks and Shares ISA per year – so pick wisely! We recommend using an expert-managed investment platform for your ISA account and the bulk of your savings.

You can then use a General Investment Account (GIA), also called a share dealing account, to make your own investments – like buying other shares and investments you’d like. With these you might have to pay Capital Gains Tax (and other taxes), if you make a large profit over the Capital Gains Tax allowance when you sell. This is currently £6,000.

Investing through a pension

Stocks and Shares ISA are a great way to invest, but there’s another investment account just as good, if not better for long-term investing, and that’s a personal pension.

A personal pension is a pension that’s in your name, and you decide when to add money and later withdraw it to retire (as long as you’re over 55). They’re highly recommended to have in addition to the State Pension (government pension), and a workplace pension (set up by your employer) to help boost your pension pot ready for retirement.

They have some huge benefits. First, everything you save is completely tax-free as it grows. However, you might pay tax on it when you start withdrawing it, but the first 25% is completely tax free. How much tax you’ll pay on the remaining 75% depends on how much your income is at the time. Speak to an independent financial advisor if you’d like specific tax advice for when you retire – you can find great financial advisors with Unbiased¹.

And second, you get a massive 25% on everything you pay in. Yep, we’re not joking! The government will add this bonus to your pension automatically after you pay in. It’s to refund the tax you’ve paid on your salary (or self-employed income), as pensions are intended to be tax-free saving.

If you’re a higher-rate taxpayer (40%) or additional rate taxpayer (45%), you can also claim some tax back at these rates too. This can make a massive difference to the overall amount of money in your pension pot over the years! You’ll do this on your Self-Assessment tax return.

Anyway, with personal pensions, just like investment accounts, you can choose an expert-managed pension or a self-invested personal pension (SIPP).

With expert-managed pensions, they’ll handle everything and grow your money over time. Our recommendation is PensionBee¹, they’re super easy to use, have a great investment track record, low fees and great service. Moneyfarm¹ tops the list too. Here’s our best pension providers to view the full range.

With self-invested personal pensions (SIPPs), you can make your own investment decisions, and buy and sell shares and other investments. These are suited to more experienced investors. If you think these are for you, here’s the best SIPPs. AJ Bell¹ tops the list with a huge range of investment options and reasonable fees.

Unlike Stocks & Shares ISAs, you can have as many personal pensions as you like!

But remember, you can't access this money until you're 55 (57 from 2028). At Nuts About Money, we see this as a good thing – you're not tempted to spend your money on expensive things like a new car. Not having this temptation can mean you retire a lot earlier, or have a pension pot big enough for a more comfortable life in retirement.

Nuts About Money tip: not sure how much you’ll need in your pension pot to retire? Here’s how much you should be paying into your pension.

What is a stock exchange?

A stock exchange is a place to buy and sell shares. There’s normally at least 1 in every country in the world, for instance in the UK, we have the London Stock Exchange (LSE) and the Alternative Investment Market (AIM) for smaller companies. In the US, they have the New York Stock Exchange (NYSE), plus others.

If a company has decided to sell shares to the public (like us), they will need to be listed on a stock exchange, and in doing so they become a public company. Issuing their first public shares is called an IPO, or initial public offering.

A stock broker (an investment platform) will connect to the stock exchange to buy or sell shares on your behalf – which is all done instantly with computers these days.

Sometimes this can be called a stock market – but really that’s a general term for the whole industry of buying and selling shares rather than a specific stock exchange.

What fees are involved?

The good news is that investing doesn’t need to be expensive, in fact, the fees are often far lower than what you’ll make in the long term!

What you’ll actually pay depends on how you’re investing, and which investment platform you choose to use.

Expert-managed investment platform fees

With expert-managed investment platforms, you’ll pay an annual account management fee, and this is normally a percentage of the total you have invested. This can vary from 0.25% to 1%+ depending on which platform you want to use. This fee can sometimes be called a platform fee.

You’ll then pay a fee as part of the investments themselves, and this is also called a management fee, or fund fee. This pays for the experts to manage the investments as part of the investment fund, and again a percentage of how much you have invested. This can range from 0.1% to 1%+ depending on the investment fund.

And when investments are bought and sold there can also be fees. These are fairly minimum and often less than 0.1% per year.

In total, expect to pay around 0.75% to 1.2% per year. One of the cheapest is Moneyfarm¹ and reduces with the more you have saved.

Self-managed investment platforms fees

Self-managed investment platforms are similar to expert-managed, where you’ll typically have an annual management fee for the stock broker to hold your investments. This is often a percentage of the amount you have invested, but can be a flat monthly fee. And with some platforms there’s no fee.

Then you might pay a fee to buy and sell shares, called a share dealing fee, which normally ranges from £1.95 to £11.95 – however, depending on which platform you use, there might not be any share dealing fee at all, such as with eToro¹.

If you’re buying investment funds, such as ETFs, you’ll normally pay a percentage of your investment total, which ranges from 0.1% to 1%+ depending on the investment fund.

As you don’t have the experts handling things, self-managed are typically cheaper than expert-managed, but not often by much.

Let’s recap

Is buying shares a bit easier than you thought? We hope we’ve made it as simple as possible! Investing really is the best thing you can do for your financial future, if done sensibly and with experts handling things (unless you’re a pro!).

In the UK, when using a Stocks & Shares ISA and a personal pension, you’ll be able to save and grow your money completely tax-free. And with a pension, get a 25% bonus from the government on everything you pay in too. (You might pay tax when you start withdrawing money from your pension, but don’t let that stop you saving into it – you’ll make much more.)

We highly recommend saving and investing for the long-term, and recommend Moneyfarm¹ for ISAs, and PensionBee¹ for pensions – they both have great track records for investing, super easy to use, low fees and great service.

If you’re looking to make your own investments and buy shares, check out the best investment platforms to find the right one for you. Although if you’re a beginner, you can’t go wrong with eToro¹, it’s low cost and easy to use.

And that’s all there is to it. All the best investing!