If you are a thing of getting started in investing and buying stocks and shares, we’ve put together a five-minute guide on how to buy stocks.
Before you buy stocks there are a few things you need:
How to buy stocks with a stockbroker?
A stockbroker provides traditional access to the market. If you want to buy stocks in UK shares, brokers offer an online paltform where you can do your research, look at prices and charts as well as buy and sell recommendations from analysts.
You can compare stockbrokers here, many also have guides on how to buy stocks through a stockbrokers.
Investing through a stockbroker is generally appropriate for longer-term investing. As well as buying individual stocks you can also buy baskets of stocks in the form of ETFs, index funds, open-ended funds and investment trusts.
In order to buy stocks you will have to open an account, deposit funds and then you can buy stocks.
If the stock markets seem a little risky you can invest in bonds through a bond broker. But as will all investing products, you can get back less than you originally invested.
How to buy stocks through a spread betting of CFD broker?
This is riskier than investing through a stockbroker as you are trading on margin. Meaning if you want to buy stocks through a CFD broker you can essentially buy £1,000 worth of shares with only £100 on account. Buying stocks this way is to leverage your capital so the risks and rewards are amplified. Yes, you can make more money faster, but you can also lose money very quickly if you get it wrong.
If you are trading through a spread betting broker, your profits are tax-free. This is because trades are structured technically as bets and instead of buying 1,000 shares you are betting £10 per point. So every penny the stock moves you make or lose £10.
Another advantage of trading stocks through a spread betting of CFD broker is that you can speculate on the market going down through shorting. This means you profit if a share price falls rather than rises. But, if a stock price rises you lose money.
How to buy stocks FAQ:
Is there a guaranteed way to make money buying stocks?
No, there is no guaranteed way to make money trading or buying stocks. The market go up and down all the time. Markets generally go up in the long run, but only you can determine when the best time to invest it. You can seek professional financial advice, but the ultimate decision is down to you.
How long does it take to open a stock brokerage account and buy stocks?
Most stockbrokers allow you to open an account online in a few minutes. Have a look at established stockbrokers in our comparison tables here.
Can I protect my losses when buying stocks?
You can use a stop loss to minimise losses but you can never completely prevent them. If you buy a stock you can set a price below the market where a broker will automatically sell it. This protects you from incurring further losses.
What if my broker goes bust after I have bought stocks?
All brokers in our investment account comparison tables are regulated by the FCA so some funds are protected by the government’s FSCS scheme. So if your broker goes bust a certain amount of your funds are safe. Also, stocks bought through a stockbroker are held in custody in your name. So if your broker goes bust they can be transferred to another broker for you to either remain invested or sell.
How to check an investment account isn’t a scam?
If you are concerned that an investment provider is trying to scam you please read our guide to investment scams.
What are the golden rules of learning to buy stocks?
- The more money you want to make the more risk you’ll have to take.
- Always diversify your investments and providers
- Never invest or speculate with money you cannot afford to lose
- Investing is a long term process, accept that you may lose money in the short term
- Always do your research and invest in things you fully understand. if you don’t understand it you shouldn’t be doing it
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Richard founded the Good Money Guide (previously Good Broker Guide) in 2015 and has been a broker for 20 years most recently at Investors Intelligence and previously a multi-asset derivatives broker at MF Global (Man Financial). Richard started his career working as a private client stockbroker at Walker Crips and Phillip Securities (now King and Shaxson) after interning on the NYMEX oil trading floor in New York and London IPE in 2001 & 2000.