CFD trading<\/a> gives you more control over your investment journey as you can automate different the online sale of shares by setting a stop loss, take profit, and trailing stop-loss orders.<\/p>\nWhy Do People Invest in Shares?<\/h3>\n
So, you\u2019ve successfully purchased shares from a UK broker. Now what? Well, the overarching aim is to make a long-term profit on your investment ideas. You will be able to achieve this in two ways \u2013 capital gains<\/em> and\/or dividends<\/em>. Let\u2019s break down how each revenue stream works.<\/p>\nCapital Gains<\/h4>\n
Regardless of what company you buy shares in, you will want to make capital gains. In its most basic form, this means that the price of the shares goes up in value. As such, you\u2019ll be hoping to sell your shares at a higher price than what you paid for them. In order to calculate your capital gains, you will need to work out the difference between the buy and sell share price, and then multiply this by the number of shares you hold.<\/p>\n
Here\u2019s an example of how to calculate your capital gains.<\/p>\n
\n- You buy shares in British American Tobacco, which is listed on the London Stock Exchange<\/li>\n
- When you bought them in 2017, they were priced at \u00a325 per share.<\/li>\n
- You purchased 100 shares, which amounted to a total investment of \u00a32,500.<\/li>\n
- In 2021, the price of British Amount Tobacco shares is \u00a340.<\/li>\n
- This means that your profit per share is \u00a315 (\u00a340 \u2013 \u00a325).<\/li>\n
- As you hold 100 shares, we then need to multiply \u00a315 by 100.<\/li>\n
- This means that were you to sell your shares, you would make capital gains of \u00a31,500.<\/li>\n<\/ol>\n
<\/i>Note:<\/strong> There will always come a time when a shares investment goes against you. If it does, you would then need to calculate your losses. Simply follow the above instructions but in reverse.<\/div><\/div>\nDividends<\/h4>\n
The second way that you can make money when you buy shares is through dividends. For those unaware, dividends allow companies to distribute some of its profits to shareholders. If the company does pay dividends, and you hold at least one share, you will have a legal right to a dividend payment.<\/p>\n
Not all companies pay a dividend income. Some well-known examples of non-dividend-paying companies include Facebook\/Twitter, Alphabet, and Monster Beverage. Dividends are typically paid on a quarterly basis, meaning that you\u2019ll receive a payment every 3 months. The exact amount is determined by the board of the company, and it can vary depending on how successful the business is at the time of the dividend announcement.<\/p>\n
![\"Screengrab](\"https:\/\/learnbonds.com\/uk\/wp-content\/uploads\/sites\/2\/2020\/01\/Screenshot-2020-01-08-at-09.20.46.png\")
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Here\u2019s an example of how a dividend payment works.<\/p>\n
\n- You buy shares in Microsoft, which is a dividend-paying company<\/li>\n
- Dividends are paid once every 3 months<\/li>\n
- Microsoft announces strong quarterly sales, so it decides to pay a dividend of $0.51 per share<\/li>\n
- This amounts to an annualized yield of 1.4% of the company\u2019s total value<\/li>\n
- As you hold 100 shares, you will be entitled to $0.51 x 100<\/li>\n
- This means that you\u2019ll receive $51 in dividends<\/li>\n
- Once Microsoft distributes the dividends, they will be paid into your stockbroker account<\/li>\n<\/ol>\n
<\/i>Note:<\/strong> Even if a company has historically paid dividends to its shareholders, there is never any guarantee that it will continue to do so each quarter. This is especially true if the company is experiencing cash flow problems, or it needs its cash reserves to fund an investment opportunity.<\/div><\/div>\nHolding Shares<\/h3>\n
There is no one-size-fits-all answer to this question, not least because no two investments are the same. The general rule of thumb is that you should hold on to shares for at least 5 years. This will allow you to ride out the ups and downs of the stock and share markets. However, you should never hold on to shares indefinitely with the assumption that the share prices will \u2018eventually recover\u2019. There are plenty of examples where this hasn\u2019t been the case.<\/p>\n
![\"graphical](\"https:\/\/learnbonds.com\/uk\/wp-content\/uploads\/sites\/2\/2020\/01\/Screenshot-2020-01-08-at-09.22.26.png\")
<\/p>\n
Let\u2019s take MoneyGram as a case in point. Had you purchased 100 shares in 2007 at $240 per share, you would have invested a total of $24,000 (about \u00a318,000). Fast forward to 2021 and the very same shares are worth $2.20. This means that your 100 shares are now worth $220. As such, although you paid \u00a318,000 13 years ago, the shares are now worth just \u00a3167! Will MoneyGram shares ever recover to its previous highs? Probably not.<\/p>\n
Risks When Buying Shares<\/h3>\n
Regardless of what class you decide to invest in, installing a sensible risk mitigation plan is crucial. In the investment space this is known as \u2018diversification\u2019. The importance of diversification should not be understated, as this will ensure that you are never over-exposed to a single company. If you were, and the company subsequently went out of business, you could lose your entire investment.<\/p>\n
What is Diversification?<\/h4>\n
In its most basic form, diversification simply means to hold a portfolio with multiple companies<\/em>. Moreover, your portfolio should consist of companies that operate in multiple industries<\/em>. In doing so, you will reduce the risks of holding too many shares in a single industry.<\/p>\n\n- For example, let\u2019s say that 80% of your portfolio consisted of tech shares. This would include the likes of Apple Inc, Facebook, Twitter, IBM, Netflix, and Amazon. If the tech industry went through a prolonged period of decline, 80% of your portfolio would be heavily affected.<\/li>\n
- A shrewd investor would never hold 80% of their portfolio in a single industry. Instead, they might distribute their holdings into 10 or more industries. This could include companies operating in the finance, agriculture, entertainment, travel, telecommunication, tobacco, retail, and automobile sectors.<\/li>\n
- Moreover, a shrewd investor would not only hold shares in multiple industries, but they would have heaps of companies within each field. For example, you could buy shares in 10 companies for each industry.<\/li>\n<\/ul>\n
Diversifying With a Single Trade Shares<\/h4>\n
Although the above example illustrates how a shrewd investor might seek to diversify their holdings, manually purchasing hundreds of companies would not only be a logistical nightmare, but it would likely cost you an arm and a leg. This is especially true if you are using a stockbroker platform that charges fees on a share-by-share dealing basis. The good news for you is that there is a way to diversify across hundreds of companies by placing just a single trade \u2013 investing in shares and the stock market index.<\/p>\n
![\"Screengrab](\"https:\/\/learnbonds.com\/uk\/wp-content\/uploads\/sites\/2\/2020\/01\/Screenshot-2020-01-08-at-10.38.27.png\")
<\/p>\n
As we briefly noted earlier in our guide, an index allows you to invest in the wider stock market, as opposed to purchasing individual shares. Each index tracks a particular stock market, such as the London Stock Exchange or NASDAQ.<\/p>\n
Below we have listed some of the most popular indexes currently active in the stock market.<\/p>\n
\n- FTSE 100<\/strong><\/li>\n<\/ul>\n
If you want to buy shares with the wider London Stock Exchange<\/strong>, then it might be worth considering the FTSE 100. This is an index that tracks the share prices of the 100 largest companies publicly listed in the UK. The index will be weighted to ensure that your investment journey is diversified. This means that the FTSE will have a single price attached to it, which will go up and down just like an individual share.<\/p>\n\n- NASDAQ 100<\/strong><\/li>\n<\/ul>\n
The NASDAQ 100 tracks the 100 largest companies traded on the NASDAQ. This particular index is dominated by big tech firms like Apple Inc, Amazon, and Facebook\/Twitter.<\/p>\n
\n- Dow Jones<\/strong><\/li>\n<\/ul>\n
The Dow Jones is arguably the most famous stock market index in the world. \u201cThe Dow closed 100 points up today\u201d is something that we have all likely heard at some point. But what exactly is the Dow Jones? Well, the Dow is an index that consists of 30 listed US companies. These are not necessarily the largest<\/em> companies in the world, but they will have a major influence on the wider US economy.<\/p>\n\n- S&P 500<\/strong><\/li>\n<\/ul>\n
The S&P 500 is one of the easiest ways to diversify your share dealing portfolio. This particular index tracks the largest 500 companies listed in the US. The index covers firms from both the New York Stock Exchange and NASDAQ.<\/p>\n
How to Buy Shares for Beginners<\/h2>\n
Now you have a better understanding of the basics of how to buy shares, we\u2019re going to walk you through the process of buying shares with a popular broker. Whether you want to buy penny shares<\/a>, dividend stocks<\/a>, or blue chip stocks<\/a>, you\u2019ll find them all.<\/p>\n1. Open an Investment Account<\/h3>\n
In order to open an investment account, you\u2019ll need to provide some personal information. This will include the following:<\/p>\n
\n- Full Legal Name<\/li>\n
- Home Address<\/li>\n
- Date of Birth<\/li>\n
- Nationality<\/li>\n
- National Insurance Number<\/li>\n
- Telephone Number<\/li>\n
- Email Address<\/li>\n<\/ul>\n
You\u2019ll also need to choose a username and a strong password.<\/p>\n
2. Verify Your Identity<\/h3>\n
As these popular brokers are authorised and regulated by the Financial Conduct Authority, the platform must comply with all relevant UK laws on anti-money laundering. This means that you will need to pass a basic KYC (Know Your Customer) process in order to verify your identity.<\/p>\n
You can verify your identity by uploading government-issued ID, such as a passport or driver\u2019s license, and proof of address, such as a utility bill or bank statement.<\/p>\n
3. Deposit Funds<\/h3>\n
Once you have opened an investment account and verified your identity, you are then ready to buy some shares. But first, you\u2019ll need to fund your account. In the vast majority of cases, online stockbrokers will give you a number of payment methods to choose from.<\/p>\n
This can include debit\/credit cards, bank account transfers, and e-wallets like PayPal and Skrill.<\/p>\n
4. Choose Which Shares you Want to buy<\/h3>\n
Once you have funded your investment account, you can then buy your chosen shares. These platforms give you access to more than 800 companies \u2013 both in the UK and abroad. As such, the easiest way to find your chosen stock is to search for it.<\/p>\n
As you can see from the example below, we are looking to buy shares in Barclays.<\/p>\n
<\/i>Note:<\/strong> If you\u2019re unsure which companies you should be investing in shares, it might be worth considering a stock market index. This is where you invest in the wider stock market through a single trade. For example, if you invested in the FTSE 100, you would be purchasing shares in the 100 largest companies listed on the London Stock Exchange.<\/div><\/div>\n5. Buy Shares<\/h3>\n
Once you\u2019ve chosen the company that you wish to invest in, you are now ready to complete your purchase. First and foremost, you will need to decide how much you want to invest.<\/p>\n
Next, you then need to decide what your entry point is. You\u2019ll have two options \u2013 a market order<\/em> or a limit order<\/em>.<\/p>\n\n- Market Order:<\/strong> The easiest way to purchase your chosen shares is to opt for a market order. This is where you instruct the stockbroker to purchase your shares at the next available price.<\/li>\n
- Limit Order:<\/strong> If you opt for a limit order, this means that you could get to choose the share price that you wish to make a purchase. For example, if Barclays shares are priced at 88.89p, but you want to purchase them at a slight discount, you can set your limit order at 88.00p. You would then need to wait for the order to be filled by the market.<\/li>\n<\/ul>\n
To complete your purchase, click on the \u2018buy shares\u2019 button.<\/p>\n
Shares to Buy in 2022<\/h2>\n
There can be no denying that the coronavirus pandemic has turned the financial markets on its head. In fact, the wider stock market lost anywhere between 20-50% in March 2021, which is huge. With that being said, some within the industry argue that this could be an excellent time to buy, not least because you may get your hands on blue-chip stocks at a major discount.<\/p>\n
As such, in the comparison table below you will find our some popular shares to buy in 2022<\/p>\n
\n\n\n\n\n<\/colgroup>\n\n\nName<\/strong><\/td>\nSymbol<\/strong><\/td>\nLast Price<\/strong><\/td>\nMarket Cap (\u00a3)<\/strong><\/td>\n<\/tr>\n\n| Amazon<\/a><\/td>\n | AMZN<\/td>\n | 3,084.00<\/td>\n | 1529.28 Billion<\/td>\n<\/tr>\n | \n| BT<\/a><\/td>\n | BT.A<\/td>\n | 112.20<\/td>\n | 11.122 Billion<\/td>\n<\/tr>\n | \n| Disney<\/a><\/td>\n | DIS<\/td>\n | 115.63<\/td>\n | 209.058 Billion<\/td>\n<\/tr>\n | \n| Lloyds<\/a><\/td>\n | FB<\/td>\n | 28.45<\/td>\n | 20.128 Billion<\/td>\n<\/tr>\n | \n| Netflix<\/a><\/td>\n | NFLX<\/td>\n | 524.88<\/td>\n | 230.84 Billion<\/td>\n<\/tr>\n | \n| Pfizer<\/a><\/td>\n | NFLX<\/td>\n | 38.54<\/td>\n | 214.038 Billion<\/td>\n<\/tr>\n | \n| Royal Mail<\/a><\/td>\n | RMG.L<\/td>\n | 176.64<\/td>\n | 1.75 Billion<\/td>\n<\/tr>\n | \n| Samsung<\/a><\/td>\n | SMSN.L<\/td>\n | 1238.50<\/td>\n | 1395.695 Billion<\/td>\n<\/tr>\n | \n| Standard Life<\/a><\/td>\n | SLA<\/td>\n | 260.90<\/td>\n | 5.889 Billion<\/td>\n<\/tr>\n | \n| Saga<\/a><\/td>\n | SAGA<\/td>\n | 15.50<\/td>\n | 175.646 Billion<\/td>\n<\/tr>\n | \n| Tesco<\/a><\/td>\n | TSCO.L<\/td>\n | 213.91<\/td>\n | 20.87 Billion<\/td>\n<\/tr>\n | \n| Tesla<\/a><\/td>\n | TSLA<\/td>\n | 1499.12<\/td>\n | 278.385 Billion<\/td>\n<\/tr>\n | \n| Vodafone<\/a><\/td>\n | VOD<\/td>\n | 122.80<\/td>\n | 32.913 Billion<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n Although we have outlined a number of methods that allow you to buy UK stocks and shares, we would suggest opting for an online broker. This will allow you to make investment decisions via your desktop or mobile device in a matter of minutes. Most importantly, online brokers market their services to everyday retail clients, so you\u2019ll be able to deposit and withdraw funds with ease.<\/p>\n With that being said, there\u2019s are literally hundreds of Financial Conduct Authority authorised and regulated brokers active in the online space, so you\u2019ll need to spend some time finding a platform that meets your needs. To help you along the way, below we have listed four of the popular online brokers that allow you to buy shares.<\/p>\n \u00a0<\/p>\n \n | | | | |