How To Invest In Stocks In The UK - Boss Of My Money

How To Invest In Stocks In The UK

Categorised as Investing
how to invest in stocks in uk woman investing on smartphone

Investing in the Stock Market

There are many ways to invest your money. Investing in the stock market gives you the best chance to build wealth over the long term and take advantage of compound interest. If you are unsure how to invest in stocks in the UK, it can seem intimidating at first, but that’s mainly because you may not understand how it works, and that’s ok.

Here at Boss Of My Money, we believe by educating ourselves and knowing everything we need to know from a trusted and unbias source will give us a great chance of becoming intelligent investors.

So we will help put your mind at ease and get ready to start investing in the stock market.

But before you start investing, there are a few things you need to consider. This article will explain all you need to know about investing in UK stocks, understanding investing terminologies, choosing what investing platform to use, how to pick good companies and more. Let’s dive in!

Disclosure: Some links in this article are affiliate links from companies we trust, which means if you make a purchase or sign up, Boss Of My Money may earn a commission at no cost to you. This helps us grow! In addition, this newsletter is for educational purposes only and not to be used as financial advice“.

The power of compound interest

We can not talk about investing or the stock market without talking about compound interest. Compound interest is interest earned on top of your original capital and then the interest paid on that. Investing where you can earn compound interest will make your money work harder for you.

For example;

Suppose you invested £100 and earned 10% interest the first year, and you would have made a total investment of £110. If you earned another 10% in the second year, your £110 would be £122.04, with a total interest of £22.04 earned in the second year.

If your investment had continued to compound after ten years, you would have earned a total interest of £159.37 with a total investment value of £259.37. Use the free calculator site to calculate compound interest.

how to invest in stocks uk compound interest vs simple interest

What is the Stock Market?

When you buy stock in a public company, you are buying a small piece of that company aka the company’s shares.

The stock market is essentially a marketplace for buying and selling small pieces of publicly traded companies listed on the stock exchange.

Just like the marketplace, you can negotiate the price you buy and sell a piece of the company’s shares. This is what causes the value of stocks to go high and low because negotiations between the buyer and seller determine the share price.

how to invest in stocks uk ticker symbol

What is the London Stock Exchange?

The London Stock Exchange (LSE) is the largest stock market in the United Kingdom and Europe.  

Despite several name changes, the LSE was founded to combat fraud by dishonest traders and establish a formal structure by regulating trading. The stock exchange is physically located in London. You can buy UK stocks, international shares, funds and bonds in the IK stock market.

What is a Stockbroker?

A stockbroker is essentially the middleman trader who will execute the buying and selling of orders on your behalf in the stock exchange market.

Some stockbrokers’ can give advice on what you should invest in whether to buy and sell stocks, bonds, options, and other securities.

Consider ease of use, research tools, mobile apps, and fees when comparing brokers.

The alternative to a stockbroker is investing yourself, using trading apps or roboadvisors to place your trades.

What is a Share?

A share is a percentage of ownership of a company or financial asset based on its market value.

In exchange for the capital to grow and operate the business, companies issue equity shares to investors.

Smaller companies can choose to sell shares privately, to friends and family, angel or venture investors, and then eventually go public and become listed on the stock exchange. 

Therefore, shareholders, or stockholders, are people who own stock in a company’s shares.

Shares are also known as stocks and are used interchangeably.

how to invest in stocks uk uptrend stock

Share types in the UK

There are two types of shares;

First, ordinary shares (aka common shares) in which shareholders are entitled to dividend payments and have voting rights.

Second, preferred shares, which do not have voting rights, and preferred shares include both common shares and corporate bonds. Therefore, the companies also pay back a fixed payment at a fixed interest rate over a set period called a maturity date.

What is a Shareholder?

A shareholder is a person who owns a percentage of a company and holds shares in a company. If you buy stocks in Amazon, be it a lot or little, then you are a shareholder in Amazon.

What is a Stock?

A stock represents ownership of a proportion of a corporation.

When you acquire a company’s stock, you buy a share of that company.

Investors buy shares from corporations they are confident will grow in value and make a profit when they sell.

You make money in investing when you buy low and sell high.

Some investors will buy and sell at retirement to cash out, others trade daily or swing trade taking profit daily, weekly or monthly.

Stock Types

According to Motley Fool, there are 19 major types of stocks you should know about, and we will close at the main two types; bonds and funds.


Bonds are loans from investors to issuers like companies or governments.

In return, the issuer undertakes to pay dividend payments on the loan’s principal and interest by a set date, known as the maturity date.

Bonds signify debt ownership, not firm equity. In a company’s bankruptcy, debtholders are paid dividend payments before shareholders, making bonds a safer investment than stocks but tend to have a lower return than stocks. 

Further advantages of investing in bonds include regular income from dividend payments, portfolio diversification, lower management fees and idle for those approaching retirement who want less risky investments.

Bonds perform well when interest rates are low and perform poorly when interest rates go up.

Governments and enterprises who need funding for day-to-day operations, airports, bridges, health services or equipment, research, wages, etc., issue bonds.

In the UK, Bonds are also known as Gilts; in the US government, bonds are known as Treasury Bills. HL provide a breakdown of prices for UK bonds and hilts, which you can view here.


A fund allows multiple investors to pool money together to purchase a portfolio of securities, including stocks, bonds, commodities, and property.

Types of funds include index funds (in the USA this is known as mutual funds), exchange-traded funds (ETF), money market funds, and hedge funds.

An investment manager usually manages funds. Funds are great for passive investors who do not have time to monitor individual companies and prefer to manage their portfolios themselves. 

Individual stocks and a ready-made approach to investing

When you decide to invest, you will be faced with choosing a DIY approach to investing, which refers to picking individual stocks or companies you wish to buy shares, bonds, or funds from yourself.

Or you may decide to invest in a ready-made portfolio or work with an investment advisor, or investment manager, which means you invest in a large pool of securities based on what fund managers suggest will perform well over time.

What is an actively managed fund vs a passively managed fund?

Active Fund

An actively managed fund is a stock or fund investment that has the potential to outperform the market.

Fund managers typically manage active funds and use their professional judgment and analytical research to decide what to buy and sell. Investors can also manage their own active funds.

This type of management requires constant market monitoring to ensure high returns during periods of market volatility.

Passive Fund

A passive fund strives to match rather than beat the market and has a more hands-off investment approach. This is accomplished by following the market index. Passive fund investing is a great way to get started for beginner investors.

Typically, passively managed funds outperform actively managed funds, and actively managed funds usually have lower fees than passively managed funds. Over the last 15 years, the S&P 150 index has outperformed active funds by more than 80 per cent.  

What is an ETF in investing?

An exchange-traded fund, or ETF, is a portfolio of securities such as stocks, bonds, commodities and other types of securities.

ETFs allow you to invest in a large number of securities at once, and they often have lower fees compared to other types of funds. Like a stock, buyers and sellers trade the ETF on the stock exchange market throughout the day. 

Typical Investment Fees

Investment fees for fund or portfolio management, advice, trade transactions, account management fees, and commission fees will differ depending on the firm you use and the fees charged by each investment manager or fund manager if you have one.

Understanding investment fees can be complicated.

As a result, doing your due diligence before entering into a deal or placing a trade is critical, as you don’t want all of your profits to be swallowed by fees.

The best fees are those that are paid in advance. As percentages can easily add up the more money you are making and can eat a junk of your profits.

Even if a company claims to have low fees, do your research and compare fees with other companies.

When to get started with investing in the stock market

Before you invest in stocks in the UK, there are a couple of factors you must consider for preparation. Let’s take a look at six of these:

1. Understand your risk tolerance before investing in stocks in the UK

Firstly, whether you are investing your money yourself or using an investment manager, understanding your risk tolerance is critical for smart investing.

Are you a low, medium-, or high-risk investor? Are you a slow and steady, conservative or aggressive investor? The older you get, the less risk you want to take with your investments and the more you want to move them to a more conservative or more secure investment type. Send us an email if you need help with working out your risk tolerance using our contact form.

2. Minimise risks using asset allocation: The Minus 100 rule

Investing in stocks in the UK stock market does come with its risks. The 100 minus your age rule will assist you in determining how much risk you should take as you get older and how to diversify your risk by allocating your assets among various asset classes such as cash, equities, and bonds if you are 35 years old. Minus 100 means you should invest 65% in equities and 35% in bonds.

3. Determine your investing goals

Secondly, having a clear objective for investing will help you not lose money and determine what type of investment you should get into.

Do you want an income investment or a growth investment? Do you want to buy and hold stocks and shares or buy and sell for short term income? Without a clear goal for your money, you are likely to lose money, follow trends, and not achieve your ultimate investing goal.

4. Get clear on your current financial position

Thirdly, before you invest, make sure that you build on a solid foundation. Determine where you stand financially.

What is the total income of your household? What are your total monthly household expenses? Are you living paycheck to paycheck, or do you have enough disposable income? Do you owe money? How much debt is there? Do you have savings for emergencies?

Because investing is risky and you could lose your money, you should have answers to these questions before you begin investing.

5. Do you have high-interest debts?

Four, if you have high-interest debt, you should be aggressive with debt repayments first. Why? Because the money you are wasting on interest could be used to invest once the debt is paid off.

However, don’t let high-interest debts prevent you from investing. Paying them off can take years, and that lost time costs you compound interest on your investments.

Make a debt repayment plan and decide on a small monthly investment amount (£50-£200).

After you’ve paid off your debts, you can put that money toward your investments.

6. Do you have an emergency fund?

The fifth factor to consider is your savings.

As a general rule, every 9-5 professional and business owner should have at least six months of monthly expenses saved up in case they lose their job, become ill, or have unexpected bills to pay for repairs.

Because investing is risky, you don’t want to rely on the profits from your investment as an emergency fund. Being that the money may not be available when you need it, you may lose more if you sell when the market is down.

As a result, try to keep a 6 to 12-month emergency fund separate from your investments.

You don’t have to wait until this is accomplished before you start investing.

You can do so concurrently.

However, you may want to accelerate your savings by putting more money into savings and then investing the rest.

Because of market volatility, you never want to invest money that you may need in the next 3-5 years.

Instead, consider putting this money in a high-interest savings account, for accessibility.

Three steps for getting started with investing in the UK stock market

Step 1: Get investing education by speaking with a financial coach

Speaking with a financial coach will help you determine your goals, evaluate your current financial situation to determine if you are ready to invest and how best to get started, as well as help you to understand your options and the best ways to get started, and avoid mistakes in the beginning. 

Before you start investing, you should improve your financial literacy.

This will give you the confidence and knowledge to make money in the stock market. An investing workshop with a financial coach would be a great starting point. You can book yours by enquiring about our investing workshop at Boss Of My Money.

Step 2: Find a financial adviser to help manage your portfolio

If you understand how investments work but would rather someone else manage it for you or advise you on what to invest in, then finding an investment financial advisor would be the next step.

Financial advice can help, especially with advice on investing in individual stocks. You can use the Financial Service Register to search for a regulated financial advisor.

Step 3: Start with a tax-free investing account.

One of the rules of wealth is using other people’s money to build wealth and paying as little capital gains tax as legally possible.

You want to invest in government-provided tax-free investing accounts in the first instance, which protect you from income tax. Not only do you not pay tax on the interest earned and growth of your capital, but you also get bonuses paid on some of them, increasing your return potential.

There are terms and conditions to how much you can invest in these accounts, what age you can open and withdraw from them, and early withdrawal fees. Therefore, be sure to read up on each to find the best one to get started. A financial coach can help you with this process.

Examples of tax-free investment accounts

  1. Stocks and Share ISA (invest in the stock market)
  2. Life Time ISA (Invest for a house deposit and your retirement)
  3. Help to Buy ISA (invest for a house deposit)
  4. Junior Stocks and Shares ISA (invest in the stock market account for children up to their 18th birthday)
  5. Self-invested Personal Pension (SIPP)
  6. Junior Self-invested Personal Pension (SIPP) (Invest in your children’s pension before they turn 18).

Investing in the stock market UK Tax Rules

When investing in the UK stock market outside of tax-free savings accounts, tax rules will apply. When you sell or give a profit or gain on an investment, you must pay tax. Your income tax liability is determined by your current income and tax bracket.

The tax you pay on shares and stock differs from the tax you pay on dividend payments. Do your research and understand the tax implications of the types of investments you make.

Where to invest your money: investment platforms, trading apps, and Robo Advisers

Type of Investment Platforms

Now that you understand what a stock market is, how you can invest, and how to prepare yourself to invest, let’s take a look at the various platforms for investing to make more money in the stock market.

Investing platforms enable you to use their systems to execute trades and purchase stocks in the broader market.

When deciding to invest, the next most important decision to make is selecting the right platform to meet your investment objectives.

This will determine what you can invest in, how you can buy or sell, and the type of fees you can expect to pay.

When deciding on an investment platform, there are a few considerations to make:

Consider the fees and commission costs, how easy the platform is to use, whether it has desktop and mobile app tools, whether it allows day trading, and whether there is a minimum cost to begin investing.

Here are six UK investment platforms to consider:

  1. eToro (invest and trade on one platform- Easy to set up and great features)
  2. Hargreaves and Landsdown
  3. Nutmeg
  4. Vanguard
  5. Fidelity 
  6. HBSC

Trading Apps

how to invest in stocks uk trading apps

Investing and trading apps make it easy for you to invest and trade using your mobile phone.

The best investing and trading apps should have no or very low maintenance fees, allow you to buy fractional shares, enable you to trade with no or low minimum balance, have charting tools, provide real-time alerts, and provide company reports for analysis.

While you can open international trading accounts, be sure to review how easy it is to transfer money into the account and also check if you can buy international stocks and what additional costs you may incur for placing trades.

 Here are some investing and trading apps to look at further: 

  1. Interactive Brokers (my personal favourite for trading and long-term investing; low fees for UK traders and investors: Click here to open an account)
  2. eToro (Another favourite for investing and trading all in one place)
  3. Money Box (general savings and Investment in the Stock Market)
  4. SoFi UK
  5. Fidelity UK
  6. Vanguard UK
  7. Charles Schwab UK

Robo Advisors

Robo advisors are automated, algorithm-based investment platforms that invest your money for you based on your financial objectives.

These apps are ideal if you lack confidence in investing your money. And if you are just getting started or do not wish to work with an investment adviser.

You will find Robo Advisor apps simple to set up for new investors, and you can begin investing right away.

Fees are generally low, with little to no minimum investment required.

Here are examples of Robo advisors to check out:

  • Moneyfarm – mid-range, offers advice
  • eToro – commission-free, including cryptocurrencies
  • Wealthify
  • InvestEngine
  • Scalable capital
  • eVestor
  • Morgan Stanley
  • Chip
  • Vanguard Digital Advise
  • Cira500
  • Plum

How to Pick the Best Stocks and Companies to Buy

When picking what stocks and companies to invest in, follow these five rules:

1. Learn the Stock Symbol/Ticker

Learn the stock symbol so that you can begin investing and trading in the companies that interest you. This is known as the ticker symbol.

When you search for stocks like Apple, the applicable stock symbol is AAPL.

The symbol for Amazon is AMZN,

and the symbol for Tesla is TESLA.

2. Pick Good Value Companies

Add companies that offer good value to your watchlist. Your watchlist is a list of good companies with investment opportunities that you want to keep an eye on.

Components of a good company include:

  • A good value company has an uptrend,
  • is stable, has a history,
  • is increasing in overall value,
  • has a volume of more than one million,
  • and is performing well over the year.

A good company is also one you know will be around in the future and drive market value.

how to invest in stocks uk downtrend company
Example Of HSBC Downtrend

3. Invest in ‘best-in-breed’ companies

Best in breed companies are the best in a specific breed, sector, or industry.

For example, you may want to invest in the tech industry and consider Apple (AAPL), but AAPL may be underperforming. In that case, you could look at how Google and Microsoft are performing. They may be outperforming Apple at the time.

4. Review Company earnings date Reports

how to invest in stocks uk earnings report

Every company has an earnings reporting day.

Yahoo Finance or the CNBC app can tell you what day it is.

The earnings report will assist you in determining where and when to enter into an investment or trade.

Generally, if the report is positive, the value of the stocks will rise; if the report is negative, the value of the stocks will fall for a while.

Depending on your investing strategy and whether you are buying to sell, swing trading, or shorting them for a day, the investment decisions you make can have a significant impact.

Earnings whisper Instagram account – This is a great place to see what earnings reports are due each week.

5. Listen to investing news

By listening to investing news, you will know what trends are taking place in the market. Beware of occasions where the news may report something negative that should impact the stock, but instead, it has the opposite effect and vice versa.

You want to know how the company performs overall, listen to the news, as well as do your charting if you are doing swing or trade trading.

6. Create a watchlist

how to invest in stocks uk watchlist

Create a watchlist of companies you want to continue researching for future investments as you research which good companies to buy.

While it may not be the right time to invest in a good value company if their share price is high, you can always revisit the companies on your watchlist to see potential investments.

If you know how to trade and have properly charted the company, you could be ready to buy when it reaches your buying zone.

How can I buy shares in the UK?

Step 1

Choose a platform where you want to invest. This could be a trading app, an investing platform, or a Robo advisor app. Examine their fees, and ensure that the platform is simple to use and that you can invest using the type of investment you prefer. You can, for example, buy stocks, bonds or trade daily.

Step 2

Create an investing account and fund it so that you can invest when you are ready. It can take some accounts a few days or a week for transfers to be completed. In this case, have your money ready in the account for when you need to place the investment or take the trade. 

Step 3

Choose a company, stock, bond, or fund to invest in. Then decide whether you want to invest as regular savings or in a lump sum. Decide on how many shares you want to buy. And there, Bobs, your uncle!

You see, it’s easy at 1,2,3 to buy shares in the UK stock market!

I take it your confidence level is reaching an 8/10? To help boost your confidence, even more, let’s go over some investing concepts. Once you’re done, you can show off to your investing friends how much you know about stock market crashes, market corrections, losing money, and how much to start investing with.

What is a Stock Market Crash?

A “bear market” occurs when stock prices fall rapidly over a long period.

If there is a sharp decline in a day, usually by 10%, it indicates a stock market crash.

What is a Stock Market Correction?

A correction is a 10% drop from the 52-week high.

Different indices or stock markets may correct at different times.

Wise investors welcome the price drop and stock market correction because it allows the market to consolidate before new highs.

Investors want to profit from a rising market.

This can lead to irrational excitement, driving stock prices above their value.

After which, prices fall, and this becomes a market correction.

The stock market usually recovers losses in three months or less after a correction. As a result, investors should buy more and hold instead of selling, which is what panicked novice investors do.

Corrections are impossible to predict in advance.

Economic growth, Fed policy, political issues, or a new COVID-19 virus variant can cause market corrections.

Can you lose more money than you invest?

Yes, you can lose money when you invest, and for this reason, you should not invest more than what you are willing to lose.

Be sure to use the checklist above on when to get started to ensure you do not put yourself at risk.

When you book a session with a financial coach, we can walk you through how to avoid losing money and educate you on starting the right way.

How much money should a beginner invest for the first time?

How much money you should invest as a beginner depends on your budget, goals, your disposable income, and if you have debts, how many debts, and if you have savings, how much savings.

Depending on your financial situation, you should aim to invest 10% of your income each month and can slowly increase this percentage each year by 2–4%, depending on your age and your investment objectives for the long term.

Using the 50/30/20 rule you can allocate up to 20% of your income after tax toward investing.


I hope this article has built your confidence level to 10. If so, you might be ready to start investing.

May I suggest you bookmark this article? I’d also ask if you could share it with a friend you want to get rich with so we can all build wealth and create the life we want. If you need help with getting started with investing, enquire about our investing workshop.

Note: Investing is risky. This article is not financial advice. This article is written for educational purposes only. Please seek financial advice before you invest, should you need one.