How to Buy Shares

A Guide to Buying Shares on The Stock Market

Apr 7, 2008

Discover how to buy shares and make money on the stock market. A step-by-step guide for beginners. PLUS! Free share tips from the experts!

This article is about how to buy shares on the UK stock market. However, the same basic rules apply for any other country, from the US to Germany to Singapore.

The markets are behaving oddly right now – there is no denying that the US sub prime collapse has shaken things up. But if a private investor is willing to take some calculated risks and follow the advice of the experts, there are still good opportunities to buy shares for profit and make money on the stock market. Here’s a step-by-step guide on how to buy shares on the stock market.

Step 1 – Open a Share Dealing Account

A basic share dealing account offers just that – the facility to buy shares through the Internet or over the phone. The simplest service is known as “Execution Only”, which means the broker does not provide any advice. They simply execute the trade as per the client’s instructions. For instance, buy 1,000 shares in ABC Plc.

Opening a standard trading account is usually free. This needs to be credited with funds from a bank account before the investor can buy shares. Alternatively, open a Stocks & Shares ISA to avoid paying tax on any stock market income within a certain limit. This is more sensible for long-term investing.

Typically, brokers charge £8-£12 per trade (regardless of the size of the trade). Some brokers charge an inactivity fee, so if no shares are traded over a three-month period, a trading fee may be applied anyway. Finding the most affordable broker is easy using a comparison site like Money Supermarket.

Step 2 – Find The Best Stock Market Tips

While some private investors do their own stock market research, it’s much easier to find a reputable stock tip sheet or equity research house that supplies all the ideas.

Don’t buy shares randomly (i.e. because they have a nice name) or trust investor bulletin boards (i.e. because someone says “this one’s going to be a ten-bagger!”) This is completely unreliable. Remember – the stock market is not random, share prices move because of fundamental attributes and investor sentiment. Understanding what causes a share price to move is the key to making money on the stock market.

That last point is often overlooked. It is easy to become attached to a stock simply because it is deemed to show promise. But if the share price is doomed, the level-headed investor must know when to cut a loss. Stock market tip sheets can take this procrastination out of the equation.

Free Share Tips

Ready to buy shares? Follow these links to get acquainted with the UK stock market. After that, pick a few company shares and invest a modest amount to start with. Remember: the value of shares can go down as well as up – so never invest what you can’t afford to lose.

Here are some popular providers offering free share tips… Generally, they are geared towards long term investing, so don't expect to make profits overnight. Log on to see what they are buying right now.

The copyright of the article How to Buy Shares in Shares/Stocks is owned by Rebecca Turner. Permission to republish How to Buy Shares in print or online must be granted by the author in writing.

Apr 29, 2008 3:24 AM

Guest :

I never tried buying stocks though I want to. Please advice the steps by steps to do. Thanks a lots and regards, LEO NABLE

May 3, 2008 6:16 PM

Rebecca Turner :

Hi Leo, the guide above is for UK investors. If you are in the US, I would recommend opening a stock trading account with Zecco.com - it's got a good reputation and is good value. Once you have an account, transfer in some money from your regular bank account. Then you can trade online by selecting the stock you want, the amount to invest, and Zecco will give you a Buy price. You must confirm it quickly before the price changes. Selling is just as straight forward. Each Buy/Sell trade will incur a small charge by the broker (Zecco). Hope that helps!

Aug 18, 2008 4:10 PM

Guest :

Thanks for your good tips. Do you know where I can start a stock trading account in Germany? Thanks for your help. Grace

Aug 18, 2008 5:41 PM

Rebecca Turner :

Hi Grace, thanks for your kind feedback. I'm not familiar with German brokers so I can't recommend a specific firm. However, if you do a search on Google.de for "German share dealing accounts" I'm sure you will find a good selection. Be sure to compare the dealing costs and whether they charge any inactivity fees. Other than that, find a reputable name and you can't go wrong. Best of luck.

Sep 24, 2008 4:56 AM

Guest :

how to buy shares?for buying shares which bank account is needed?give examples?advance thanks

Sep 24, 2008 5:20 AM

Rebecca Turner :

You need to open a Share Dealing Account specifically for trading stocks and shares. You can do this through your usual bank (eg, HSBC) or through a share dealing company (eg, Hoodless Brennan). You can't trade shares through your usual bank account; instead you should credit money from this account into a Share Dealing Account.

Oct 12, 2008 7:15 PM

Guest :

I have never tried buying shares on line can someone tell what i have to do I dont live in the US or the UK i'm form the Cayman Islands.
Kind Regards,
DEW

Oct 15, 2008 2:40 AM

Guest :

do you know any thing about australian brokers, thinking about buying some shares while the markets down, what do u think???
marlie, australia

Oct 16, 2008 9:15 AM

Guest :

Always make sure you get the lowest transaction cost broker if a part-time share trader.

Andy
www.savingtoinvest.com

Oct 24, 2008 1:46 PM

Guest :

Great advice. From an American perspective the key thing is to find the cheapest broker so you minimize the transaction cost. As discussed here ( http://www.savingtoinvest.com/2008/04/how-to-buy-shares-two-simple-steps.ht ml ) you can get all the research you need from the web, so don't pay extra for that.

Nov 19, 2008 10:28 PM

Guest :

please, i need some advise, i am having shares in a number of companies
but due to the present economic crisis, i am feeling somehow confused on what to do, should i sell them off or wait and be hoping that it will some be ok,

Dec 5, 2008 4:11 AM

Guest :

Is there a time limit between the time i buy shares and when I can sell them?

Dec 5, 2008 1:06 PM

Rebecca Turner :

There are no rules about how long you can hold shares. If you are buying a genuine growth stock, expect to hold for at least a few months. You may wish to sell after a year or two, or you may hold as a real long term investment (10+ years). Investors rarely have reason to buy and sell the same stock in one week, unless you are gambling with volatile penny stocks. Leave it to the day traders.

Jan 27, 2009 4:49 AM

Guest :

will there be additional charge to the stockbroker/on the personal dealing acc, if i purchase a share and hold them for long term?

Feb 1, 2009 10:04 PM

Guest :

i`m young & trying to get some $$$ a.s.a.p
i think i know where my mind is .
stock market .
i`m about to get rich !
_ gm .