How to Buy Stocks in the UK as a New Investor

Buying stocks can feel intimidating at first — especially if you’re new to investing. But with the right knowledge, it becomes a simple and powerful way to grow your wealth over the long term. Whether you’re looking to save for retirement, generate passive income, or simply beat inflation, investing in shares can be a smart move.

This step-by-step guide will walk you through everything you need to know about buying stocks in the UK as a beginner, from understanding what shares are to choosing a broker and making your first purchase.

What Are Stocks (Shares)?

Stocks — commonly referred to as shares in the UK — represent a fraction of ownership in a company. When you buy a share, you’re effectively buying a piece of that business.

For example, if you buy shares in Tesco, you become a part-owner of the company. As a shareholder, you may receive a portion of the profits in the form of dividends, and if the company grows in value, the price of your shares may go up.

Why Invest in Stocks?

Investing in shares offers several benefits:

Potential for capital growth – Historically, stocks tend to outperform cash and bonds over the long term.
Dividends – Many companies pay regular dividends to shareholders, which can be reinvested or used as income.
Ownership in companies – You own part of businesses you believe in.
Liquidity – Most shares can be easily bought and sold on stock exchanges.

That said, shares can rise or fall in value, so there are risks involved. However, with a long-term mindset and a well-diversified portfolio, investing in the stock market can be one of the most effective ways to grow your money.

Step-by-Step Guide: How to Buy Stocks in the UK

Step 1: Set Clear Financial Goals

Before you start investing, ask yourself:

What am I investing for? (Retirement, a house deposit, passive income?)
How long can I leave the money invested?
How much risk am I comfortable with?

If you’re investing for the long term (5+ years), you can generally afford to take more risk — such as investing in shares — compared to short-term savings goals.

Step 2: Learn the Basics of Investing

It’s important to understand some key investing principles before getting started:

Diversification – Don’t put all your eggs in one basket. Spread your investments across different companies and sectors.
Volatility – Share prices go up and down. Don’t panic at every dip.
Compound growth – Reinvesting profits and dividends can snowball your returns over time.
Time in the market beats timing the market – Trying to predict market highs and lows is near impossible.

There are plenty of UK-focused resources such as The Motley Fool UK, MoneySavingExpert, and Which? Money for beginner investors.

Step 3: Choose the Right Investment Account

In the UK, there are several types of accounts through which you can buy shares:

1. General Investment Account (GIA)

No tax shelter.
You may need to pay Capital Gains Tax or Dividend Tax if your returns exceed annual allowances.

2. Stocks and Shares ISA

Tax-free wrapper.
You can invest up to £20,000 per year (as of 2025) without paying tax on income or capital gains.
Ideal for long-term investing and tax efficiency.

3. Self-Invested Personal Pension (SIPP)

Tax relief on contributions (great for retirement saving).
Can’t access funds until age 55 (rising to 57 by 2028).
Investments grow tax-free.

For most beginners, a Stocks and Shares ISA is the best place to start.

Step 4: Pick a Stockbroker or Investing Platform

To buy shares, you need to open an account with a stockbroker or investing platform.

Popular UK brokers include:

Hargreaves Lansdown – Great research tools, but slightly higher fees.
AJ Bell – Affordable and user-friendly.
Freetrade – Commission-free trades; simple app for beginners.
eToro – Offers copy trading and fractional shares.
Interactive Investor – Flat monthly fee, great for frequent investors.
Vanguard UK – Low-cost index investing, ideal for passive investors.

When choosing a broker, consider:

Dealing fees – Some charge per trade, others are commission-free.
Platform fees – Annual account charges.
Range of investments – Shares, ETFs, funds, bonds, etc.
Ease of use – Mobile app or desktop platform usability.
Customer service – Accessible support and resources.

Once you’ve chosen your provider, you’ll need to register, complete identity checks, and fund your account using a bank transfer or debit card.

Step 5: Decide What to Invest In

There are three main ways to invest in stocks:

1. Individual Shares

You pick and choose specific companies (e.g., BP, AstraZeneca, Lloyds).
Higher risk but potentially higher reward.
Requires more research and time.

2. Exchange-Traded Funds (ETFs)

A basket of shares bundled together.
Examples include the FTSE 100 ETF or S&P 500 ETF.
Lower risk through instant diversification.

3. Mutual Funds or Investment Trusts

Professionally managed portfolios.
You invest in a fund that buys a selection of shares on your behalf.
Ideal for beginners or hands-off investors.

Top tip: Many UK beginners start with a global ETF or a FTSE 100 tracker fund.

Step 6: Place Your First Trade

Once you’ve chosen your investment, placing a trade is simple:

Log in to your investing platform.
Search for the company or fund you want to buy.
Choose the number of shares or the amount of money to invest.
Select your order type:
- Market order – Buys at the current price.
- Limit order – Only buys when the price hits your target.
Review the order and confirm.

Congratulations — you’ve just bought your first stock!

Step 7: Monitor Your Portfolio (But Don’t Obsess)

Check your investments occasionally to ensure they’re aligned with your goals, but avoid checking daily, which can lead to emotional decision-making.

Key things to monitor:

Company performance and updates.
Dividend payments.
Sector trends.
Overall portfolio balance — are you still diversified?

Consider reviewing your portfolio every 3–6 months.

How Much Do You Need to Start?

You don’t need thousands to begin investing. Many platforms allow you to start with £10–£100, and some offer fractional shares, so you can own a piece of Amazon or Microsoft without paying full price.

What Are the Risks?

All investing involves risk, including:

Market risk – Stocks can fall in value.
Business risk – A company could underperform or go bankrupt.
Liquidity risk – Some stocks are harder to sell quickly.

Mitigate these risks by:

Diversifying your investments.
Investing for the long term (5+ years).
Avoiding emotional decisions.
Only investing money you can afford to leave untouched.

Common Mistakes to Avoid

Chasing hot stocks or the latest trend.
Panic selling during market dips.
Investing without understanding what you’re buying.
Overtrading, which racks up fees.
Putting all your money in one stock or sector.

Final Thoughts: Start Small, Learn as You Go

Buying shares in the UK has never been more accessible, thanks to low-cost apps, tax-free accounts, and educational resources. Whether you’re investing £50 or £5,000, the key is to get started, stay consistent, and focus on the long term.

As you gain confidence, you can experiment with different strategies and build a diversified portfolio tailored to your needs and risk tolerance.