Earning a living in the United Kingdom is anything but easy. With the prices of commodities rising up and the job market getting more saturated by the day, unemployment looms for middle class citizens. Under such circumstances, it seems quite an alluring option to turn your attention towards the UK stock market.
You can earn handsome profits by trading shares in the stock market. In order to get involved in the stock market trading, you need to first wrap your head around the basic concepts of buying shares.
Thankfully, unlike buying real estate or businesses, buying shares is far less complicated in the UK. Here, you will learn the ins and outs of how to buy shares in the UK stock market.
Buying Shares Online
Let’s start out with the easiest way shall we? If you are not looking to be overwhelmed with complexities or hassles, then the best options for buying shares is heading over to online platforms. Yes, shares are available for purchase on the internet readily.
Buying shares online are in fact the cheapest and easiest ways to obtain shares and increase your portfolio of shares. Online, shares are found in what’s called a “share dealing platform”. From these platforms, you will be able to buy any shares of any company that has its name on the stock exchange lists of the United Kingdom.
If you are interested in buying shares of overseas companies, these online platforms will allow you to do that as well by tapping into the foreign exchanges.
London Stock Exchange - The Main Hub
The main stock exchange of the United Kingdom is the London Stock Exchange. Here, you will stumble upon a wide range of companies. Even if you are the most knowledgeable person when it comes to the British industries, you will still fail to recognize all the companies that are listed in the London Stock Exchange.
Such is the variety that is on display here. To say that you will be amazed by the sheer number of companies would be a major understatement.
The London Stock Exchange is also home to some of the biggest names in the British economy. True powerhouses across various industries such as Marks & Spencer dominate the London Stock Exchange day in and day out.
Obviously, if you have just gotten involved in stock marketing trading, you should not be eyeing the prized stocks of companies as big as Marks & Spencer.
Once you establish a certain reputation in the market and have traded successfully for an extensive period of time, you can contemplate the idea of getting your hands on a good number of Marks & Spencer shares.
Alternative Investment Market
In the case that your ambitions are not sky high, and they really should not be so, you should check out the Alternative Investment Market. This is the place where you can find stocks of smaller developing companies.
You may not have heard of the names of these companies, but you are strongly recommended to conduct a thorough research of these newcomers in the British industries.
More often than not, these companies have the potential to grow big over the years, and you surely do not want to miss out on the opportunity of buying the share of a rapidly growing company before its stock price spirals out of control.
How Are Companies Listed?
In order for companies to be listed on the stock exchange, they have to complete an official Initial Public Offering. This is the process which converts the company from a private limited company to a public company.
This gives people the ability to buy shares of the company. In other words, the basic principle of buying shares is that as long as it is listed on the UK stock market, you have the legal license to purchase those shares. Shares that are trading on the stock market will always be available for you to purchase.
Prices of Shares You Buy
The price at which you buy shares will vary massively. This is because the price of shares is determined by the supply and demand of potential buyers and sellers at a particular moment in time. Not only are the price variations among shares high, but the frequency of changes in the price of an individual share is very high as well.
The price of shares can change within a matter of minutes, and sometimes, within a matter of seconds. This is why it is so important to keep your eyes fixed on the price index of the stock market when you are planning to buy shares.
Setting Up An Account
Once you know the exact share you want to buy, you will be required to set up a trading account. No buying (or selling) of shares can be carried out without having a trading account. After the account has been created, you need to make sure that you fund your trading account.
You do not necessarily have to pour in your life savings to fund the account. A decent sum of money that will cover the costs of your stock purchases should do. If there is not enough money in your account, you will not be able to purchase the shares that you desire.
Buying Shares from Trading Account
With an account set up, the next step towards buying a share in the UK stock market is logging into the account. Once logged in, you can search for any share that piques your interest. You have the option of choosing between buying a quantity of shares or a value.
Once you have picked your share, you have to re-check that you have sufficient funds to cover the price of the share as well as the dealing charges. After selecting the manner in which you would like to trade, a price will be quoted. When this shows up, simply accept the price and the share will be added to your portfolio.
Charges for Buying Shares
There are some specific charges that you need to be concerned about when buying (or selling shares). They are:
a) Account Fee
b) Inactivity Fee
c) Buying/Selling Shares Fee
d) Stamp Duty