How to buy British shares?
Investing in British or English stocks can be attractive! But where can you buy UK shares against low transaction fees? And what should you pay attention to when investing in English stocks?
Where can you invest in English stocks?
You can choose either to actively speculate in English shares or to buy the stocks for the long term. We discuss the best options.
Where can you actively invest in English shares?
Some people would like to actively invest in English CFD shares. This allows you to respond perfectly to the latest price developments. For example, it is possible to open a short position with which you can achieve a good result even when the price falls.
A good party where you can actively speculate on English CFD stocks is PIus500. With the button below you can open a demo account for free:
72% of retail CFD accounts lose money.
What is the cheapest method to buy UK shares?
Would you prefer to invest in English stocks in the long term? Then you can buy stocks at a broker.
When you are going to invest in English companies, it is important to do so at a cheap party. Many people waste money because they pay too high transaction costs and this is of course a shame.
In most cases, it is best to choose a broker where you do not pay set commissions. In this way, you can achieve good results with your investments even with a small amount of money. eToro is one of the few brokers where you can always invest in British shares without paying commissions. Use the button below to directly open an account with this broker:
Your capital is at risk. Other fees apply. For more information, visit etoro.com/trading/fees.
Keep an eye on the price of the British Pound
When buying British stocks, it is important to pay attention to the price of the British Pound. This is especially important when you invest in UK stocks using another currency, such as the euro. The exchange rate of the pound can then influence your result in euros. When the value of an English share rises, but the value of a euro against the pound falls, you can achieve a negative result in euros.
Even if you use the pound yourself, it is important to take the exchange rate into account. When the British pound falls in value, companies that export many products can compete more easily. As a result, stocks of export-oriented companies can increase in value.
When investing in British stocks, it is therefore important to pay attention to the exchange rate of the pound.
The role of trust
If you want to invest in England, it is important to investigate consumer confidence in the region. We can illustrate this well with Brexit. When England left Europe, consumer confidence decreased. As a result, companies that sold products to the internal market performed less well. Consequentially, companies selling products to the internal market underperformed.
At the same time, the fall in the pound sterling meant that companies that sold products internationally achieved better results. The products are then relatively cheap for countries using different currencies, which means that companies focused on exports perform better.
It is therefore important to take all these factors into account when investing in British shares. Determine which companies have the best competitive position at the moment and buy their stocks.
Tip: Check here for the opening hours of the British Stock Exchange.
How to buy English shares: 5 simple steps
Investing in English stocks does not have to be difficult. In this manual, we describe how you can buy first English stock in just a few steps.
Step 1: opening an investment account
Before you can buy English stocks, you must first open an investment account. To complete this, you need to leave some basic information: for example, your name, address, date of birth, and contact details.
You also have to upload a copy of your identification to almost every broker. This makes it possible for the broker to verify your identity and make sure you have no criminal intent.
Would you like to know from which broker you can buy British stocks at the most advantageous rate? Then take a look at our overview of the best brokers:
Step 2: Deposit money
After you have opened an account, you need to deposit money into your account. At most brokers, it is already possible to invest as little as $100 in shares. This allows you to invest even a small amount in English companies.
Step 3: select a share
After you deposited money, you have to select a share that you want to buy. It is important to analyse whether the share is worth buying at that moment. A worthy to buy a share is a share of a company that will probably do better in the future. In this way, your capital can grow in the long term.
Selecting a stock is usually easy within the software of a broker. In the image below you can see how you select a share at eToro.
Step 4: buy the share
When you have chosen a nice British share you can place an order on it. First, you have to think about the amount of money you want to invest in the share. With some brokers, you can apply leverage. With leverage, you can take a larger position and thus lend a part of the money from the broker. This is not recommended for most novice investors.
After you have entered an amount, you can press open investment. You then buy the share directly at the current share price. You can also choose to use a limit order. With a limit order, you select a price at which you buy the stock.
What do you need to know about investing in UK stocks?
Before investing in UK stocks, you must understand exactly how stocks work. In this section of the article, we will discuss everything you need to know about investing in English shares.
What are shares?
A company may decide to go public. When a company goes public, it sells small parts to whomever it wants to buy. These parts are called shares. When you buy a share of a company from England, you immediately become co-owner of the company. However, your ownership percentage is then very small. When a company sells a million shares, and you buy one, you are for only one-millionth owner of the company.
Stock prices change from second to second. This is due to the struggle between buyers and sellers of shares. The principle is simple: when more people want a share, the price rises, and when fewer people want a share, the price goes down.
Do you want to know more about stocks? Then read our article about what shares are.
How can you make money with stocks?
Of course, people buy stocks because they expect to make a profit from them. There are two ways in which you can make money by investing in an English company.
The first method is very well known: price gain. When more people want a share, the price rises. It is important to remember that the price of a share does not always have to increase in line with the value of a company. Sometimes a company can also be a hype which causes the price to rise too high. In that case, we say that the share is overvalued.
The second way to make money with UK stocks is by benefiting from the dividend. Companies regularly distribute part of their profits in the form of dividends. In many countries, you first have to pay tax on the dividend payment. After this tax has been deducted from your investment, you will receive the money directly into your investment account.
How to achieve better investment results?
Not everybody who invests in British stocks also achieves good results. In this part of the article, we give you some tips that can help you achieve better results.
Tip 1: practice
Most novice investors dive straight into the deep end. When you do this when you can't swim, it doesn't end well. It is therefore not strange that 70 to 80% of the starting investors lose money. In most cases, it is smarter to practice buying and selling shares first.
A good way to practice buying and selling stocks is by opening a free demo at a broker. Are you curious about with which brokers you can try investing with for free? Then click the button and compare the different demo accounts with each other:
Tip 2: start small
After you have practised with a demo, you will learn that it feels different when you invest with real money. It is therefore advisable to start investing with a small amount: for example 100 or 200. When you trade with a cheap broker, you can buy a few shares. This makes it possible to buy English stocks in several companies even with a small investment.
Tip 3: Analyse stocks
It is important to analyse companies well. For example, if you invest 500 in Unilever and you hear in the news that they are going to lay off employees, there is a good chance that the share price will fall. Negative news can put the price of a share under pressure. Incidentally, this does not immediately mean that it is necessary to sell your stocks.
For example, you can look at important fundamental data of a share. The price-to-earnings ratio shows how high the share is valued. To calculate this ratio, you divide the income per share by the price of one share. When the price-to-earnings ratio is very high, investors are very hopeful about the future. The company then has to grow strongly to live up to these expectations in the future.
You can also look at the debt-to-Equity Ratio. This number lies between 0 and 1 where a higher number shows a stronger correlation between equity and debt.
Incidentally, this does not always have to be a bad thing: capital-intensive companies such as construction companies or airlines, for example, have to invest a lot. It is therefore advisable to compare the share with other stocks in the sector.
Tip 4: spread your risks
Within the UK stocks show very different results. British supermarkets, for example, may be doing well, but luxury brands could at the same time record poor results. As an investor, it is therefore wise to spread your opportunities across the various sectors as much as possible. In this way, you avoid losing a large part of your assets because one sector is performing badly.
Tip 5: stay stubborn
The successful investor remains stubborn. Keep asking questions and do not assume in advance that you are a brilliant investor. Invest carefully and keep an eye on the UK economy. By doing so, you can achieve the best results.
How to select a good trading platform for British stocks?
When you want to invest in British stocks, it is important to select a platform of high quality. It is therefore important to choose a broker with an official licence. In the UK, professional brokers are registered under the FCA. Is a broker not under supervision? Then it is better to select another broker.
It is also wise to look specifically at the transaction costs charged by the broker for English stocks. Some brokers charge relatively higher costs for buying stocks from England. When you use another currency than the pound, you should check whether the broker charges a commission for converting your currency to the pound.
What is the English stock index?
If you want to apply a good level of diversification immediately, you can choose to invest in an ETF on the stock index. An ETF is an investment product that tries to track the price of, for example, an index. A good broker where you can invest in this type of index is DEGIRO. At DEGIRO you pay no transaction costs on index funds from the core selection. With the button below you can directly open an account with this party:
Do you want to know more about UK shares?
On trading.info you can find a lot of specific information about various English shares. In this category you can directly read more about the largest companies: