How to buy stocks and shares
Want to invest in stocks and shares but don't know where to start? Bewildered by stock market jargon?
Don't worry – you've come to the right place. Our simple guide will tell you everything you need to know to make your first share transaction.
How do I get started?
- Buying and selling shares is easier now thanks to low-cost internet dealing and the ability to track your portfolio online. However, it still requires some preparation and thought. First you need to set your investment goals – whether they're to generate income or capital growth. Shares that pay a generous dividend tend to deliver income, while fast-growing new companies could generate capital growth. It depends on what you want to achieve.
- Next, consider your appetite for risk. How comfortable are you taking risks? You can lose all of your money investing on the stock market. If you dislike taking any chances with your money, the stock market may not be for you. Higher returns are typically associated with higher risk shares and lower returns with lower risk shares. So-called 'blue chip' shares – those in FTSE 100 companies – tend to move up and down less than faster-growing, riskier companies' shares, which could therefore generate higher returns. Investors may aim to create a well-rounded, diversified share portfolio that balances higher-risk investments with lower-risk ones.
Buying and selling shares
- Invest through a stockbroker: If you’re looking to invest in a company’s stocks & shares you need to do this through a broker such as Barclays Stockbrokers. You will need to pay commission and stamp duty on share dealings – for more details check out Barclays Stockbrokers
- Invest in stocks & shares through a fund: Rather than following the markets and picking shares or bonds yourself, you could invest in a fund. Funds invest in a mix of assets including individual stocks & shares.
- As a general rule, holding 1 investment is riskier than holding 2. And 3 is safer than 2. 4 is better than 3 and so on. This is because all investments do not react in the same way to the same economic conditions.
- We offer a broad range of funds so you can choose from our ready-made investment portfolios or build your own portfolio from a wider range of funds. View all investment options
- At Barclays you can make share transactions through an investment ISA up to a maximum of £11,520 in the current tax year.
Do your homework
- Always do your own research. Never buy shares on a friend’s advice or even because of a newspaper recommendation. Make your own decisions. Take your time and don’t rush. It can be tempting to trade regularly but you are more likely to lose money doing so. Don’t forget you will have to pay commission fees each time you buy or sell shares.
- Investment magazines and books can provide advice and suggestions on how to value shares. You can also practise your stock-picking skills by running a fantasy share portfolio online first before you buy shares for real. Many investment websites offer this service for free.
- Share prices will fall as well as rise so think of the bigger picture. Be prepared to invest for the medium to long term (usually five to ten years) and expect your investments to fluctuate during that time.
- Remember that if the company's share price drops below what you originally paid the value of your original investment will fall. Never invest money you need for other purposes, such as paying your bills.
The price and value of investments and their income fluctuates: you may get back less than the amount you invested. If you are in any doubt about investing in these types of investments, you should consult an independent financial adviser.
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