How To Invest In Stocks UK – Investing In Stocks For Beginners 2021

If you’re looking to start gaining exposure to the stock market but are in the dark as to how you should go about investing, you’ve come to the right place. 

With thousands of ‘How to invest in stocks’ searches made every month on Google, you may be asking yourself the question ‘how do I invest in stocks?’ The stock markets have been popular with investors and analysts since their conception in the late 18th century and early 19th century. To reinforce this point, a $10,000 investment in Amazon stock priced at $18 per share during its 1997 IPO would have been worth over $12 million nowadays.   

So before we dive into the ins and outs of how to invest in stocks UK right now, let’s take a look at a quick step-by-step beginner’s guide. 

How to Invest in Stocks

Table of Contents

How to Invest in Stocks UK – Step by Step Guide 2021

If you’re ready to start investing in stocks right now, we’d recommend opting for eToro due to its low fees and seamless onboarding process. The following step-by-step guide will help you invest in different stocks listed on 17 international exchanges from the comfort of your own home. 

  1. Open a Live Trading Account – Head over to eToro’s website and click on the button marked ‘Join Now’. Then provide a valid email address and choose a username and password.
  2. Verify your Account – As part of the KYC process, you will need to verify your account by uploading proof of identity and address. This can be done by uploading a copy of your passport and a recent utility bill. 
  3. Deposit Funds – Deposit at least $50 using a credit/debit card, bank transfer, or e-wallet.
  4. Invest in Stocks – After you’ve researched your preferred stocks search for the company you want to invest in. Then simply specify the stake amount and tap on ‘Open Trade’. 

Step 1: Choose a Stock Broker

The first step before you can start investing in stocks is to open an account with a trusted broker. Brokers act as intermediaries in the financial markets, matching buyers and sellers together. With that in mind, it’s key that you pick a stock trading platform that is suited to beginners, has low fees, and is regulated. 

But with so many online brokers out there, how do you pick the right one? It’s often the case that when faced with an insurmountable array of options, making a decision can become disorientating. So, in this section of our beginner’s guide to stock trading, we’ve reviewed some of the best stock brokers out there so that you don’t have to. 

1. eToro – Overall Best Broker to Invest in Stocks UK with 0% Commission

Our top recommendation for stock trading platforms in the UK is eToro. Since its launch back in 2006, eToro has become one of the leading social tradingeToro logo platforms with a client base of over 20 million. eToro is regulated by several top-tier financial authorities including the UK’s Financial Conduct Authority (FCA), CySEC, and ASIC. As a global CFD and forex broker, it offers a wide selection of stocks listed on 17 exchanges which makes portfolio diversification that much easier. eToro also offers one of the best trading apps for free stock trading.   

Trading fees and commissions  

eToro is one of the leading discount brokers, meaning that it facilitates commission-free trading with tight spreads. This top-rated broker makes online trading accessible and affordable, especially since it offers fractional share trading. In other words, you buy a fraction of a stock with a minimum investment of just $50. When it comes to non-trading fees, while there are no deposit fees or account fees, there is a small $5 withdrawal fee and a $10 monthly inactivity fee after one year of no login activity. As well as stocks, eToro offers commission-free ETF (exchange-traded funds) trading.

Trade Markets on eToro

What about payment methods and deposit fees? 

Depositing funds into your account is simple and easy. eToro supports a wide range of payment methods including debit cards, credit cards, bank transfers and e-wallets. There are no deposit fees to worry about and when you transfer cash with a debit or credit card or e-wallet (PayPal, Skrill, Neteller), the funds are credited to your account instantly. Bank transfers, on the other hand, take four to seven business days to process. 

eToro's CopyPortfolios

Is eToro safe? 

eToro is regulated by multiple financial authorities including the UK’s Financial Conduct Authority (FCA), the Cyprus Securities and Exchange Commission (CySEC), and the Australian Securities and Investment Commission (ASIC).

As well as providing negative balance protection, UK-based investors are covered by the Financial Services Compensation Scheme (FSCS). This means that should the broker go into liquidation you can expect to receive up to £85,000 in compensation. 

Fee Type Charge
Stock Trading 0% Commission
Cost of buying AAPL stocks Zero Commission
Account fee None
Deposit fee None
Withdrawal fee $5
Inactivity fee $10 after 12 months
Conversion fees From 50 Pips

Pros

  • Invest in stocks UK commission-free
  • Buy stocks in bulk or just a fraction, from as little as $50
  • Home to over 20 million traders worldwide
  • Fully regulated by FCA, CySEC and ASIC
  • Wide range of payment methods

Cons

  • USD is the only supported account base currency

67% of retail investor accounts lose money when trading CFDs with this provider.

2. Capital.com – Best CFD Broker to Buy Stock CFDs with Market-Leading Spreads  

Founded in 2016, Capital.com is a widely popular forex and CFD broker that’s regulated by several top financial institutions including the UK’s FinancialCapital.com Conduct Authority. This top-rated CFD stock broker offers a user-friendly trading platform, with heaps of educational resources that beginner traders will appreciate. Additionally, you can open a free demo account in a matter of minutes and practice your trading strategies with $1,000 of paper funds. 

Trading fees and commissions  

Despite not being able to buy and sell stocks in the traditional sense, Capital.com allows you to speculate on the price movements of more than 4,000 stocks. In other words, you will be buying and selling contracts for differences (CFDs), and using leverage to speculate on the market movements of the underlying assets. 

Capital.com trade share CFDs

As such, when you invest in stock CFDs on Capital.com you will not pay a penny in commissions. Furthermore, you can use up to 5:1 leverage. Capital.com also has some of the lowest non-trading fees in the industry including no deposit fees, withdrawal fees, inactivity fees, and account fees. So, arguably one of its best selling points is that all tradable assets can be bought and sold on a 100% commission-free basis. From share CFDs to forex pairs you can gain exposure to heaps of markets on a low-cost basis, without taking ownership of the underlying assets. This low-cost fee structure is ideal for trading strategies such as day trading as you can choose between long and short positions, and use leverage to increase your buying power. 

Payments and deposit fees

You can deposit funds into your brokerage account by using a credit/debit card, bank wire transfer, or e-wallets such as Apple Pay and Sofort. The minimum deposit is just $20, and deposits made using credit/debit cards and electronic wallets are processed instantly. 

Capital.com web trading terminal

Is Capital.com safe?   

Capital.com complies with regulations set by the FCA and CySEC. When it comes to client fund protections, UK-based clients are covered up to £85,000 by the Financial Services Compensation Scheme (FSCS), while European traders are covered up to €20,000, should the broker go into insolvency.

Fee Type Charge
Stock CFD Trading 0% Commission
Share CFD Leverage Up to 5:1
Forex Leverage Up to 30:1
Account fee None
Deposit fee None
Withdrawal fee None
Inactivity fee None

Pros

  • Trade stock CFDs with 0% commission
  • The minimum deposit is just $20
  • Identify unique trading opportunities with 75 technical indicators
  • Fully regulated by the UK’s FCA and CySEC
  • Variety of convenient payment methods supported including Apple Pay

Cons

  • Cannot set price alerts on the web-based platform

 76.72% of retail investor accounts lose money when trading spread bets and/or CFDs with this provider.

3. AvaTrade – Top-Rated CFD Broker with Commission-free Trading and Competitive Spreads

Launched in 2006, AvaTrade is a global CFD and forex broker that is regulated by multiple top-tier financial authorities. In terms of products and markets, AvaTrade offers forex trading and a variety of CFD derivatives covering stocks, bonds, ETFs, commodities and more. You can also trade seven cryptocurrencies directly via the AvaTrade platform with 0% commissions and zero bank fees on transactions.

Fees and commissions

AvaTrade facilitates commission-free trading. Regardless of whether you choose to invest in forex, CFDs, or cryptocurrencies, the only trading fees you will encounter are the bid-ask spreads. Additionally, if you keep positions open after the market closes you will have to pay an overnight financing fee. 

AvaTrade stock CFDs

The average spreads are only indicative amounts as they are easily swayed by volatile market conditions and macroeconomic events. In terms of margin trading, the margin rates are also subject to change based on relative market factors such as trade volume, liquidity and volatility. 

As for non-trading fees, there are no deposit or withdrawal fees, as well as no account fees. However, AvaTrade charges an inactivity fee of $50 after three months of non-use. This is then followed by an annual administration fee of $100 after one year of inactivity. 

Payment methods

As aforementioned, AvaTrade accepts a wide range of payment options when depositing and withdrawing funds. These payment methods include credit cards, bank wire transfers, and e-wallets such as Skrill and Neteller. The minimum deposit when using a credit card or e-wallet is $100. 

AvaTrade trading terminal

Is AvaTrade Safe?

AvaTrade is a widely popular CFD trading platform that operates on a global scale. As such, this trusted broker is authorized and regulated by several top-level financial institutions. These include the Australian Securities and Investments Commission (ASIC), the Financial Sector Conduct Authority in South Africa, Japan’s Financial Services Agency and the Financial Futures Association of Japan, the Abu Dhabi Global Markets Financial Regulatory Services Authority, CySEC, the Central Bank of Ireland, the B.V.I (British Virgin Islands) Financial Services Commission, and the Israel Securities Authority.

Fee Type Charge
Stock CFD Trading 0% Commission, typical spread for Amazon Stocks is 0.13% and leverage up to 5:1
Forex Trading 0% Commission, typical spread for EUR/USD is 0.9 pips and leverage up to 30:1
Account fee None
Deposit fee None
Withdrawal fee None
Inactivity fee $50 after 3 months of inactivity and a $100 administration fee after one year.
Overnight Financing Fee Trade Amount * Daily Overnight Interest = Daily overnight interest charged/paid. For example, for a 1,000 EUR/USD trade with a daily overnight interest buy rate of -0.0064% and subject to a one day charge, the calculation is 1,000 * -0.000064 = -0.064 = -$0.06

Pros

  • Commission-free CFD trading
  • Open a live trading account with a minimum $100 deposit
  • Low non-trading fees
  • Heavily regulated by many financial watchdogs
  • Unfettered access to MT4, MT5, AvaSocial and more. 

Cons

  • Fractional share trading is not offered

Your Capital is at Risk.

Invest in Stocks UK – Broker Price Comparison

If you’re still unsure as to which trading platform you should choose, take a look at the following comparison chart. This highlights why we recommend eToro as the best commission-free stock broker in the UK right now.

Broker Commission Account Fee Deposit Fee
eToro 0% £0 £0
Capital.com 0% £0 £0
AvaTrade 0% £0 £0
Libertex  Starts from 0.1% £0 £0

What are Stocks? 

Stocks are units of ownership in a publicly listed company, otherwise referred to as shares of equity. When you purchase shares of stocks, you’re buying a percentage stake in a business. Investing in shares of stock also comes with some added benefits. What are stocks? How do stocks work? Understanding the answers to these simple yet important questions is one of the keys to successful investing. 

Companies sell shares of stock to raise capital to fund their business projects, as well as for research and development purposes. When businesses sell stocks, they’re allowing institutional and retail investors to buy fractional ownership, making them shareholders. Equity is another way to refer to ownership, and equities is an interchangeable term used to mean stocks. 

What are the benefits of investing in stocks?

When you invest in shares of stock, you are entitled to some benefits based on the type of shares you have ownership of. Some of these shareholder rights include:

  • Voting rights – some stocks give you voting rights allowing you to vote during annual shareholder conferences. 
  • Dividend payouts – A company that generates high profit margins can choose to start paying dividends to its shareholders. Around 75% of companies that make up the S&P 500 index pay a quarterly dividend.

Average daily number of trades on the LSE   

The average daily number of trades on the London Stock Exchange surged in March 2020 with a mean trading volume of 2,036,690 according to statista.com. Then just five months later the average daily trading volume fell to lows of 760,180 in August 2020. ‘Since the coronavirus pandemic, the total market value of companies trading on the LSE has fallen significantly, before rising again in late 2020 to reach just over one million in early 2021. As of July 2021, the value had fallen again to a little over 849,230.’

Statista chart showing average number of daily trades on the London Stock Exchange

Image source: Statista.com

Best Ways to Invest in Stocks UK

Invest in individual stocks

If you’re committed to researching the best stocks to invest in right now then building a DIY diversified portfolio of stocks from scratch may be the best approach for you. Investing in UK stocks requires a lot of technical and fundamental research into past performance. Professional investors often spend hours monitoring market volatility and trends to identify unique trading opportunities. 

eToro - invest in individual stocks to build a diversified portfolio of stocks

Long-term investing involves buying stocks and holding those assets to sell them in the future for a profit. Short-term investing is a broad term that covers a wide range of investment strategies including trend trading, news trading, scalping, swing trading and day trading. 

Gain exposure to the stock markets by Invest in index funds  

Index funds track stock indexes such as the FTSE 100 and the S&P 500. Index funds usually have lower fees and are tightly pegged to the performance of the underlying assets. For example, the S&P 500 index has generated yearly returns of around 10%. 

Furthermore, the Chairman and CEO of Berkshire Hathaway, Warren Buffett, has often voiced his approval of index funds. On May 1st, 2021 at Berkshire Hathaway’s annual meeting in Los Angeles, the business magnate told reporters that rather than investing in individual stocks, investing in a low-cost index fund is a much better option. “I recommend the S&P 500 index fund and have for a long, long time to people.” Mr. Buffett said according to a CNBC report. 

S&P 500 chart YTD

To reinforce his theory, Warren Buffett presented a graph that showed the huge range of car manufacturers in the early 20th Century. Mr. Buffet said that there were around 2,000 companies that entered the automobile sector because of its strong long-term potential. “And in 2009, there were three left, two of which went bankrupt […] “It’s a great argument for index funds, if you just had a diversified group of equities, U.S. equities, that would be my preference, but to hold over a 30 year period.”

Passive investing – Copy trading and robo advisors

Another popular way to gain exposure to the stock markets is via robo advisors and copy trading. Robo advisors are based on automation and algorithms to monitor and manage investments. They’re designed to tailor investment portfolios to your trading preferences, risk tolerance, budget and more.  

eToro copy trading

Alternatively, you can use copy trading tools such as those offered by eToro. When you open an investment account with eToro you can use its native CopyTrader and CopyPortfolio features. CopyTrader allows you to copy the trading strategies of up to 100 individual expert traders at once. With CopyPortfolios you can invest in either a theme or portfolio of the best eToro investors.  

Are stocks a good investment? 

Stocks are a great way for the average investor to earn profits over the long term. As a shareholder, you take partial ownership of interest in a company. As that company grows and its market capitalisation increases, your shares of stocks also appreciate. Moreover, in most cases shareholders also receive dividends. 

If you’re an avid follower of Warren Buffett, chances are you will have come across the idea of a wide moat. In the same way that a wide and deep moat surrounding a fortress makes invading it near impossible, a sustained competitive edge can inhibit competitors from taking a company’s market dominance. 

What make Apple and Amazon such good investments?

Such sustainable market advantages aren’t impossible to find if you know where to look. In other words, you want to search for stocks that have strong potential to enter mainstream use. Take companies like Amazon (NASDAQ: AMZN) and Apple (NASDAQ: AAPL) for example, these tech giants pretty much dominate their respective markets. As more and more consumers subscribe to and use these blue-chip companies, it becomes more and more difficult for competitors to capture a share of the market, thus making them a good long-term investment. 

Investing in Stocks – What are the risks? 

As with all investments, there are underlying risks that you need to be aware of. One of the most important tips to always bear in mind is that you should only invest the amount of money you can afford to lose. 

The risks associated with stock investing can be broken down into two types: 

  1. Market volatility – stock prices can fluctuate quickly and dramatically overnight. This is a potential risk if you intend to sell your shares in the short term. One way you can hedge against market volatility is to buy and hold your positions for the long term. Despite several market crashes and economic downturns, stocks have delivered sizable returns for shareholders who purchased and held.
  2. Unforeseeable losses – Shareholders own a portion of a company’s stock. Therefore, if the company goes into insolvency other parties such as bond owners and suppliers are entitled to be compensated first. Shareholders typically receive whatever is left after that. The most effective way of offsetting these types of investments is to build a diversified portfolio. This means that you will distribute your funds amongst a rich variety of stocks and other assets. Even if you happen to invest in a few stocks that prove to be bad investments in the long term, any gains you make from well-performing stocks will offset their losses. 

How to Invest in Stocks UK on eToro 

Let’s explore a simple walkthrough to learn how to invest in stocks UK on eToro right now.

Step 1: Open a Live Trading Account on eToro

The first step involves opening a live trading account. The onboarding process is straightforward and fully digital, usually taking a matter of minutes. Head over to the eToro website, click on the button marked ‘Join Now’, provide your details and pick a username and password. 

 

eToro open an account

Cryptoassets are highly volatile unregulated investment products. No EU investor protection. 67% of retail investor accounts lose money when trading CFDs with this provider.

Step 2: Verify your account 

As eToro complies with the standard KYC (Know Your Customer) regulations, you will need to verify your account by providing proof of ID and address. To do this you can simply upload copies of your passport and a recent bank statement. The processing team will notify you once they’ve verified your account.  

Step 3: Deposit funds into your account

In addition to zero deposit fees, eToro supports a variety of payment options including debit and credit cards, bank transfers and e-wallets like PayPal and Neteller. When you deposit using a credit/debit card or e-wallet your funds are credited to your account instantly. Deposits made using bank transfers typically take between four and seven business days to process. 

Step 4: Search for or browse through heaps of stocks

Once you’ve successfully opened, verified and funded your account you’ll be ready to start searching for the right stocks that suit your trading goals and individual circumstances. To do this you can search the company name or the ticker symbol for the stocks you want to invest in. 

For example, let’s say you wanted to invest in Apple stocks. Simply type Apple or AAPL in the search bar at the top of the dashboard as depicted below, and click on ‘Trade’ next to the relevant result from the drop-down menu. 

search for AAPL on eToro

Alternatively, you could browse through stocks by industry and exchange by clicking on the ‘Trade Markets’ button located in the navigation bar to the left of the screen. 

Step 5: Invest in Stocks

Once you click on ‘Trade’ an order window will appear allowing you to enter your investment amount. Seeing as eToro facilitates fractional share trading, you can purchase partial shares of expensive stocks with as little as $50. 

eToro AAPL stocks

To open your position simply click on the ‘Open Trade’ button, located at the bottom of the screen. 

How to Invest in Stocks UK – Conclusion

Once you’ve picked the stocks you want to invest in you need to maintain a long-term mindset. For instance, if your stocks experience a downtrend it can be tempting to sell. Don’t put all your eggs in one basket, instead build a diversified portfolio of stocks and index funds with strong fundamentals. 

With that said, eToro makes investing in stocks and other financial assets easy and simple. From copy trading features and fractional share trading to 0% commission and a free demo account, eToro is the ideal choice for beginner traders. 

So, to start investing in stocks right now just follow the link below and open a live trading account today!

eToro – Best Stock Broker to Invest in Stocks with 0% Commission  

Cryptoassets are highly volatile unregulated investment products. No EU investor protection. 67% of retail investor accounts lose money when trading CFDs with this provider.

FAQs

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About Dassos Troullides PRO INVESTOR

Dassos Troullides is an experienced finance writer who specializes in CFD, stock, and crypto trading. In particular, Dassos is skilled at breaking down complex financial topics to help new and advanced investors make better trading decisions. Dassos also writes for TradingPlatforms.com, BuyShares.co.uk, LearnBonds.com, InsideBitcoins.com and ForexCrunch.com