How to Invest in Water UK – Invest in Water Today!
Please note that we are not authorised to provide any investment advice. The content on this page is for information purposes only.
If you’re looking to invest in a commodity, it might be worth considering water. After all, this commodity has, and always will be, in global demand – irrespective of how the broader financial markets are performing.
In this guide, we explain how to invest in water in the UK with an FCA-regulated broker and which financial products are best for this purpose.
Table of Contents
#1 Broker to Invest in Water UK – eToro
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How To Invest in Water UK – Choose a Broker
Like all financial instruments, if you wish to invest in the water in the UK – you will need to go through a broker.
Check out the list of pre-vetted brokerage sites below – each of which allows you to invest in or trade water from the comfort of home.
- eToro – Overall Best Place to Invest in Water UK
- Capital.com – Trade Water Stocks at 0% Commission
Each of the above investment platforms offers low fees and a strong regulatory framework. To assess which broker is best for you and your water investment needs – be sure to read our full reviews further down.
How to Invest in Water UK – A Quick Guide For 2021
Once you learn the basics of how to invest in water in the UK, you should be able to complete the process in under five minutes. At eToro, you can invest in a range of water stocks and ETFs – all on a 0% commission basis.
Here’s what you need to do:
- Step 1: Open an Account with eToro – You will first need to register an account on the eToro website. Proceed to enter your personal information and contact details, and choose a username/password.
- Step 2: Upload Your ID – Like all FCA-regulated brokers, eToro will be required to verify your identity. For this, all you need to do is upload a couple of documents. This includes a passport/driver’s license and a recently issued proof of address – such as a bank account statement.
- Step 3: Deposit Funds – eToro requires a minimum deposit of just $50 – which is approximately £35. To have your deposit processed instantly, choose from a debit/credit card or an e-wallet like Paypal.
- Step 4: Search for Water – Once you know which water-centric investment you wish to make, search for the asset. For instance, if you want to invest in American Water Works stocks – simply enter the name of the company into the search box and click the ‘Trade’ button.
- Step 5: Invest in Water – You will now see an order box on your screen. Enter your investment amount ($50 minimum) and click ‘Open Trade’ to complete your 0% commission water investment at eToro.
Once you have invested in your chosen water investment, the respective asset will be added to your eToro portfolio. You can cash out at any given time during standards market hours.
67% of retail investor accounts lose money when trading CFDs with this provider.
Where to Invest in Water UK – Full Broker Reviews
The first step to take when thinking about the best ways to invest in water in the UK is to choose a suitable online broker. Not only should your chosen broker support your preferred water investment and at low fees, but it should also be regulated by the FCA. Plus, fractional investments and low deposit amounts are an added bonus, as is support for debit/credit cards.
With this in mind, below you will find a selection of the very best brokers in the UK that allow you to invest in water.
1. eToro – Overall Best Place to Invest in Water UK
When searching for the best brokers to invest in water in the UK – eToro was an easy winner. This stockbroker has grown to huge prominence since it was launched in 2007 – with more than 20 million people now using the platform to buy, sell, and trade. Safety is assured at eToro, not least because the broker is regulated by the FCA and covered by the FSCS. eToro is also regulated by financial bodies in the US, Australia, and Cyprus too. At eToro, you only need $50 to get started with an account.
You can fund your eToro account with a UK debit/credit card, Paypal, Skrill, bank transfer, and more. Plus, the registration and verification process should take you no more than five minutes. Once your account is set up, you will then have access to a wide range of water investments. At the forefront of this is a wide selection of stocks that are directly involved in the water industry. In fact, as eToro supports thousands of stocks from 17 UK and international markets, you can easily build a diversified portfolio.
For example, eToro offers markets on everything from American Water Works and Water Corporation to Mueller Water Products and Zurn Water Solutions. You will also find over 250+ ETFs, many of which focus on commodities like water and renewable energy. In terms of fees, eToro allows you to invest in water stocks and ETFs without paying any commissions, Spreads are tight, and if investing in a stock or ETF that is listed on the London Stock Exchange, eToro will waiver the stamp duty tax.
In addition to stocks and ETFs, you can invest in cryptocurrencies at eToro, and even trade forex, hard metals, energies, agricultural products, indices, and more. If you’re looking to create an investment portfolio, but you wish to trade passively – you might want to consider the eToro Copy Trading tool. This allows you to invest in an individual trader that uses eToro to invest. There are also social trading tools offered by this top-rated broker, which allows you to share ideas and strategies with your fellow eToro users.
Pros
- Invest in stocks at 0% commission and ZERO stamp duty
- Minimum investment per stock investment is $50
- Supports debit/credit cards, e-wallets, and UK bank transfers
- Regulated by the FCA and covered by the FSCS
- Used by over 20 million people
- Perfect for beginners
- Social and copy trading tools
Cons
- Perhaps too basic for technical traders
- No support for MT4 or MT5
67% of retail investor accounts lose money when trading CFDs with this provider.
2. Capital.com – Trade Water Energy Stocks at 0% Commission
Capital.com is a trusted CFD trading platform that is both authorized and regulated by the FCA, and covered by the FSCS. Capital.com is also regulated by ASIC, CySEC, and NBRB. This platform offers a great alternative to traditional investments, insofar that you can trade water stocks without needing to own the underlying shares. And as such, this allows you to trade your chosen stock with leverage of up to 1:5. In simple terms, by applying leverage of 1:5, this would turn a £50 position into £250.
Always tread with caution when trading with leverage, as this tool will also amplify your losses. Nevertheless, CFDs at Capital.com can also be traded at 0% commission alongside tight spreads. No fees are charged on deposits, withdrawals, or inactive accounts either – so it truly is a low-cost broker. In terms of supported water markets, you will have access to a range of companies that operate in this space. To name a few, this includes the likes of Severn Trent, Global Water Resources, Beijing Enterprises Water Group, and American Water Works.
Capital.com supports buy and sell positions on all supported markets, meaning that you can attempt to profit from both rising and falling prices. This can come in handy if water stocks go through a stagnant period, as you short-sell with ease. Alternative markets available on the Capital.com website include forex, indices, ETFs, index funds, commodities, and bonds – all in the shape of leveraged CFDs. You can trade all supported instruments via your standard web browser or by downloading the Capital.com app.
Either way, the native Capital.com trading platform is easy on the eye – so even beginners are catered for. Opening an account with Capital.com will take you no more than a few minutes. After entering your personal details and making a deposit – you are good to go. To benefit from the platform’s minimum deposit requirement of £20, you will need to fund your account with a debit/credit card or e-wallet. Otherwise, bank transfer deposits require at least £250.
Pros
- Top-rated spread betting and CFD broker
- Licensed by the FCA, ASIC, CySEC, and NBRB
- £20 minimum deposit (debit/credit cards and e-wallets)
- 0% commission on all markets
- Tight spreads and no fee on deposits or withdrawals
- Supports thousands of financial markets
- Convenient for newbies
Cons
- Experienced traders might consider the broker too basic
- £250 minimum deposit on bank transfers
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 78.77% of retail investor accounts lose money when trading spread bets and/or CFDs with this provider.
How to Invest in Water UK – Detailed & Explained in Full
In this section of our guide, we are going to show you how to invest in water in the UK, step-by-step. This means walking you through the process of opening an account with eToro and making a deposit, and finally – completing your 0% commission water investment.
Step 1: Open a Broker Account
First, head over to the eToro website on your chosen device. Then, after clicking on the ‘Join Now’ banner, you will be presented with a registration box like in the image below. After filling in your name, email, and telephone number – choose a username/password and hit the ‘Create Account’ button.
Next, you will be prompted to provide some additional personal information, such as your home address and national insurance number. Finally, eToro will ask you a few questions about your prior trading experience so that it knows what financial products to offer you.
67% of retail investor accounts lose money when trading CFDs with this provider.
Step 2: Verify Your Identity
As a heavily regulated broker, eToro will now need you to complete a Know-Your-Customer (KYC) process.
For this, upload the following two documents:
- Government-Issued ID: Passport or driver’s license
- Proof of Address: An official document dated within the prior three months – such as a utility bill or bank statement
Once you upload the requested documents, they will be verified in under five minutes. With that said, if you don’t have the documents to upload right now, you can come back to the KYC step later. Just note that your deposit limits will be restricted to $2,250 (about £1,600) until this is done
Step 3: Deposit Investment Funds
Now it’s time to add some funds to your eToro account so that you can proceed to invest in water. The minimum first-time deposit was recently reduced to $50 from $200 – which is even more conducive for investing on a budget.
If you want your deposit added to your eToro account instantly, opt for a debit/credit card or e-wallet. Otherwise, if you wish to deposit funds by making a UK bank transfer, this will delay the process by several days.
Step 4: Choose Water Investment
If you already know which water investments you seek to make – you can use the search box at the top of the page. For instance, in the example below, we are looking to invest in UK-based water company – Severn Trent.
If you aren’t quite sure which water investments to make, click on the ‘Discover’ button on the left-hand side of the eToro dashboard. This will allow you to browse the many financial markets that eToro offers.
Step 5: Invest in Water
Now that you know which water investment you wish to make, you simply need to set up a buy order. First, click on the ‘Trade’ button – which will popular an order box. Then, you will need to specify your investment stake in the ‘Amount’ box. In our example, we are looking to invest $200 into Severn Trent shares.
You can, however, invest from just $50. Most important – irrespective of which exchange your chosen water investment is listed on, eToro will not charge you any commissions. As an added bonus, as Severn Trent is listed on the London Stock Exchange, we would ordinarily need to pay a stamp duty tax of 0.5%. However, at eToro, this tax is waivered. Finally, click on the ‘Open Trade’ button to complete your investment.
Note: If your chosen market is closed, click on ‘Set Order’ and eToro will action it when it reopens.
Best Ways to Invest in Water UK
It goes without saying that it is impossible to invest in water in the UK directly. Instead, you will need to look at alternative ways to invest in this commodity.
To help point you in the right direction, the sections below explore the very best ways to invest in water.
Best Water Stocks to Invest in
One of the best ways to invest in water in the UK is to do so via relevant stocks. These are companies involved in a specific part of the water supply chain. This includes purification of water, bottling, or distribution. This might even include companies that provide technology for water production and treatment. Either way, by investing in water stocks, you will have direct exposure to this marketplace.
American Water Works
If you need some inspiration, a good example of a popular water stock is American Water Works. Founded way back in 1886, this stock is the largest water company in the US. American Water Works is a perfect example of a solid blue-chip stock that continues to perform well – even when the broader markets are struggling.
For instance, back in 2008, this stock was trading for just $21. Fast forward to 2021 and the company has since surpassed a stock price of $189. This represents steady but attractive gains of 800% in just over 13 years. Now, this US-based company is listed on the New York Stock Exchange (NYSE).
As a UK investor, you can purchase shares in this company at eToro without paying any commission. Plus, even though the stock is trading at over $168 at the time of writing, eToro allows you to buy fractional shares from just $50.
67% of retail investor accounts lose money when trading CFDs with this provider.
Severn Trent
If you’re looking to invest in water companies based in the UK, you might want to consider Severn Trent. Founded in 1989, this company is listed on the London Stock Exchange and is a constituent of the FTSE 100. This is yet another example of a stable blue-chip stock that has provided investors will slow and steady returns. In the 12 months prior to writing this guide, Severn Trent was trading at just under 2,500p per share.
Based on current prices, this means that Severn Trent shares have grown by just over 12% over the past year – which is attractive. In fact, we should also note that Severn Trent offers a great track record when comes to paying dividends. Its most recent dividend yield amounted to 3.9% – which is great for those seeking regular income payments.
67% of retail investor accounts lose money when trading CFDs with this provider.
Invest in Water ETFs
If you don’t feel comfortable picking individual stocks, you might choose to invest in water in the UK via an exchange-traded fund. This means that you will invest money into a large-cap financial institution like Invesco or iShares, which will subsequently purchase a basket of relevant assets on your behalf. This allows you to invest in water without needing to do any research or have an understanding of how this marketplace works.
A great example here is the Invesco Water Resources ETF. This ETF will invest in 38 leading water stocks and it is listed on the NASDAQ in the US. This means that when using eToro to invest, not only do you need to meet a minimum of just $50 – but you won’t pay any commission. Nevertheless, some of the biggest holdings in the Invesco Water Resources ETF include:
- Roper Technologies Inc.
- A. O. Smith Corp.
- IDEX Corp.
- Tetra Tech Inc.
- Advanced Drainage Systems Inc
In terms of fees, this ETF provider charges an expense ratio of just 0.6%. This means that for every £1,000 invested, you will pay just £6 per year. When it comes to performance, the Invesco Water Resources ETF was trading at just $24 five years ago. And today – the same investment would be worth 140% more.
67% of retail investor accounts lose money when trading CFDs with this provider.
Trade Water CFDs
If you’re more a short-term trader, you might also consider CFDs. As we briefly mentioned earlier, this allows you to trade water stocks and ETFs without taking ownership. Instead, you simply need to speculate on whether you think the price of the asset will rise or fall.
By trading in this manner, platforms like eToro and Capital.com allow you to do so with leverage. This means that you can amplify the size of your water trade by a factor of five.
Here’s an example of how a leveraged water trading position might work:
- Let’s suppose that you wish to trade Severn Trent shares
- At the time of the trade, the shares are trading at 2,823p – which you think is undervalued
- As such, you decide to place a buy order at a stake of £500
- You also apply leverage of 1:5
- A few days later, Severn Trend shares have increased to 3,120p
- This represents growth of just over 10%
in cashing out your CFD trade with a sell order, you make gains of £50 on your £500. However, you also applied leverage of 1:5, so this takes your £50 profit to £250. On the other hand, if you thought that Severn Trent shares were overvalued, you could have short-sold the stock by entering the market with a sell order.
Is Water a Good Investment?
Investing in water isn’t a surefire way to make money. After all, you will be investing in a specific stock or ETF, so there is no guarantee that your position will result in a profit. As such, we would suggest reading through the following sections to determine whether or not water is a good investment.
Essential Commodity
To state the obvious, water is a commodity that is essential to life. This is unlike other commodities in this space – such as oil or natural gas. After all, although there is global demand for these energy products, alternatives in the form of renewables do exist. But, in the case of water, there always will be demand across the globe regardless of how the economy is performing.
This is a crucial aspect to consider when investing, as the financial markets move in cycles. For instance, during the most recent market recession of 2008, the vast majority of industries suffered greatly. This was especially the case for non-essential products and services. However, by allocating a segment of your portfolios to stable commodities like water – you stand the best chance possible of protecting your capital.
Slow and Stable
When you invest in water in the UK, you will be injecting capital in a sector that historically, yields slow and stable growth. Similarly, many water companies pay regular dividends, so this is great if you seek a predictable flow of income.
Although this means that you might be missing out on greater gains elsewhere, it’s crucial to have some assets in your portfolio that offer a lower risk spectrum. This will ensure that you are well-diversified and thus – you will avoid being overexposed to higher risk markets like growth stocks.
Diversification is Easy
One of the best things about the global water industry is that the space is not dominated by a small number of stakeholders. This is because there are hundreds of public companies directly involved in water across many markets.
Then you have water ETFs, which allow you to invest in a diversified basket of companies operating in this space. Ultimately, this allows you to gain exposure to the wider water industry, as opposed to having to invest in just a few companies.
Shortage and Increased Demand
As with all commodities, when demand increases and supply levels are restricted, the value of the respective market will increase. In the case of water, global demand continues to rise in response to an ever-growing population crisis. Plus, as the world becomes more and more polluted, this further reduces the amount of clean water that we have at our disposal.
If this trend continues – although not a positive thing from a social perspective, this could lead to global water prices rising at a much faster rate. This means that your stock and ETF water investments will benefit greatly.
Should I Invest in Water?
The only way to know if water represents a good investment for your portfolio is to do plenty of independent research. Having a firm grasp of how this marketplace works with respect to global demand and supply levels is crucial to success.
And, if you simply don’t have the experience to research individual stocks, don’t forget that you can also gain exposure to water through an ETF. This will ensure that your chosen ETF manages your capital on your behalf, so you can enjoy a passive water investment experience.
Risks of Investing in Water?
Before you invest in water in the UK, we strongly suggest that you consider the risks. After all, just because water is an essential part of life, this isn’t to say your investment will yield a profit.
The main risks to consider when learning how to invest in water are as follows:
Company Risk
Even if you decide to invest through an ETF, you will still be injecting capital into specific companies that operate in the water industry. This means that you also need to consider the fundamentals of the respective business.
- For example, let’s suppose that the global price of water increases. In theory, this is excellent news for water companies, as they can charge higher prices for their product.
- However, this doesn’t guarantee that the company will be more profitable, as it might suffer from high production costs.
This means that the value of your stocks can grow at a slower pace than water itself. Once again, this is why it is crucial to ensure that if you invest in water in the UK, you create a well-diversified portfolio.
Government Restrictions
Another risk to consider when you invest in water is the threat of government intervention. As noted above, when global water prices increase, this invariably benefits companies that operate directly in this industry.
However, as a product that is essential to life, governments will all-but-certain put restrictions on the amount that water companies charge everyday consumers. This could limit your potential returns when investing in water stocks.
The Cost of Investing in Water in the UK
When you got through the process of investing in water in the UK, certain costs will apply.
Deposits and FX Fees
The first cost that you are likely to come across when you invest in water in the UK is that of a deposit fee at your chosen brokerage. If investing in a non-UK instrument, you also need to consider FX fees.
Water Stock Commissions
As is the case with all stock investments, you also need to consider the commission charged by your chosen trading platform. For example, if you decide to invest in water stocks at Halifax, you will pay a share dealing fee of £9.50 per trade. At Hargreaves Lansdown, this is even higher at £11.95.
This is why we much prefer low-cost brokers like eToro – which allows you to invest in water stocks at 0% commission and ZERO stamp duty. This 0% commission service is even the case if investing in water stocks and ETFs listed on a foreign exchange.
Water ETF Fees
If you decide to invest in a water ETF, then you need to check the provider’s expense ratio. This is an annual fee that is calculated against the size of your investment. For instance, the previously discussed Invesco Water Resources ETF comes with an annual expense ratio of 0.60%.
How to Invest in Water UK – Conclusion
You now know the ins and outs of how to invest in water in the UK. As this guide has explained – the best ways to invest in water is through stocks and ETFs. This will allow you to indirectly gain exposure to this essential commodity from the comfort of your home.
If you’re ready to invest in water right now – eToro allows you to complete the process in under 10 minutes. You will have access to heaps of waster-related investments at 0% commission – as most importantly, eToro is regulated by the FCA and covered by the FSCS.
eToro – Best Broker to Invest in Water UK
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