The basics of buying shares
Contrary to popular belief buying and selling shares (and funds too) is actually pretty straightforward. Stock market trading is predominately done online these days, making it more accessible than ever. Before we explain further let’s just bust a bit of jargon. When you hear the words “trade” or “trading” what we are essentially talking about is a transaction to buy or sell a share.
Where do you buy and sell shares?
There are many different providers of trading services (often referred to as stockbrokers or just brokers). These platforms typically have websites that allow you to access your portfolio, view share prices and buy/sell shares (and funds). In many cases these platforms will even have a mobile app allowing you to access your account on the go.
What shares can I buy?
You can buy shares in any company that is listed on a public stock exchange. When a company joins a stock exchange it issues shares in the company for purchase. These shares are then bought and sold between investors.
In the UK we have the London Stock Exchange, where the large FTSE companies are listed. However, as a UK investor you aren’t limited to only buying shares in U.K companies. You may choose to invest globally as part of a diversified strategy. For example, the U.S stock market have their own stock exchanges with shares in U.S companies available to purchase.
What time of day can I buy and sell shares?
In the UK, the London Stock Exchange is open for trading between 08:00 and 16:30 Monday to Friday. This means that you can view live buy and sell prices and initiate a trade based on these prices via your online broker during these hours. However, many brokers will still allow you to place online orders outside of these hours. An order allows you to set a maximum buy price or a minimum sell price and once trading next opens, the broker will attempt to fulfil the order. If the price has exceeded your limit when trading commences then you order would not be carried out.
How old do I need to be to buy shares?
You will need to be 18 to open an account with a broker and buy shares. However, many providers allow a parent to open an account on behalf of a child under the age of 18 and transfer the holdings in the account to them when they turn 18.
How much does it cost?
Charges vary by provider, typically averaging around £10 per transaction. Different providers offer slightly different deals. For example, some just charge a flat fee per trade, some reduce the flat fee if you are trading frequently and some charge an annual fee. If you are investing you will want to ensure you fully understand the fees your chosen platform charges and factor these into any calculations you are making about the potential profitability of your share purchase/sale.
Keeping it simple
Deciding whether to invest in the stock market through buying shares is a personal choice and it may not be for everyone. However, understanding how it works doesn’t have to be a dark art. It’s a simple process that can be accessed online through a range of different providers.
If you’re keen to learn more make sure you check out the rest of our website or grab a copy of our free Beginner’s Guide to Investing in the Stock Market.
All our content is provided for educational purposes only, to help you make your own decisions. We don’t provide personalised advice and therefore our content should not be considered an invitation, inducement or recommendation to engage in any particular investment activity. Please review our disclaimer and website terms for full details.
