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Shares

09/05/2017

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Shares, equities or stocks. This is when you buy a very small slice of a company. So you own a smidgeon of British Airways, Tesco or ITV.

hares, equities or stocks. This is when you buy a very small slice of a company. So you own a smidgeon of Burberry, Tesco or ITV.

You can either buy shares directly – through an online broker – or in a basket of investments which someone else picks for you – called a fund.

If you buy them directly there are trading costs. You will typically pay about £10 a pop and 0.5% stamp duty to the Government. So this can be an expensive way of buying small amounts – many funds in comparison don’t have trading fees. However, after the initial purchase, there are no management fees to pay as with a fund – because there’s nothing to manage! You have a single company and you have tied your fortunes to theirs. If it goes up – bonza! If it goes down – ouch.

For less experienced investors this is a risky way to get exposure to the markets. Why? Well, let’s say you have £1,000 to invest and you buy one share. If that goes badly, you’ve done badly.

If you take that same £1,000 and put it in a fund, that fund will have about 30-60 shares in it. Mitigating the risk of any one group doing badly. Spreading your bets.

If you want to trade shares directly you can look at AJ Bell Youinvest, Hargreaves Lansdown or TD Direct Investing which are kinder to less experienced share traders who don’t need to do complex stuff.

Related Questions

Got a Question?

  • I am 25 and starting to seriously financially plan out my future. I would really welcome a 'sense check' on my thinking as well as some help on which investment choices to make. My goals are: To invest for 15 years - my risk appetite is very high (i.e. I could afford to lose all my money). Goal 1 - More Important: To have an investment pot of £1,500,000. Goal 2 - Less Important: To be mortgage free. My plan is: 1) Open an annual Stocks and Shares ISA each of the next 15 years. 2) Open Share trading/dealing account. 3) Reduce my mortgage term to 6 years by 2025. I appreciate the above is a lot to go though, but I'd welcome any help and guidance.

    Mo | London | 15/10/2018 | 3

    • Stocks and Shares ISA
    • Shares
    • Online Investment Platforms
    • Funds
    • Other
    Holly Mackay's Response

  • Is there a reason you don’t list Saga in your Best Buys? Additionally, I have purchased a few investment trust shares but can’t work out how the dividends are paid. Scottish Mortgage is an example. I wasn't given an option to choose how to receive the dividends. It would be useful if you could provide some clarity on how investment trusts pay their dividends.

    Carl | Buckinghamshire | 07/09/2018 | 1

    • Shares
    • Online Investment Platforms
    Holly Mackay's Response

  • I wanted an investment trust with an income, so I put £10,000 into The Investment Company. It delivers a reliable quarterly dividend but the capital value has dropped by 10% since I invested 2 years ago. What are your favourite investment trusts?

    Fran | Greater London | 08/08/2018 | 4

    • Shares
    • Funds
    Mark Dampier's Response

  • I'm 24 and would like to begin investing. Am I better off using a robo advisor such as Wealthify/Wealthsimple or a fund such as Vanguard LifeStrategy?

    Amanda | Greater London | 06/08/2018 | 6

    • Shares
    • Robo Adviser
    • Online Investment Platforms
    Holly Mackay's Response

  • I would like to open a Junior shares ISA for my Grandson for about £50/month. How do I go about it and can you recommend some reliable companies?

    Roger | Surrey | 26/04/2018 | 2

    • Junior ISA
    • Shares
    Founder and CEO's Response

  • Can you recommend some very basic books for a 69-year-old widow who is now having to manage her money? Thanks

    Martha | 12/04/2018 | 0

    • Shares
    • Funds
    Helena Wardle, Chartered Financial Planner, Sterling and Law's Response

  • I just found your web site (recommended in Andy Bell's book on Do It Yourself investing). Could you say why you do not review Halifax Share Dealing in your list of ISA providers? Is there anything wrong with this ISA provider for you not to include it?

    Gerald | 11/04/2018 | 0

    • Shares
    Dr Richard Bradley's Response

  • I am post-divorce with a good settlement which I have only partially invested. Are there any courses you can recommend? I have sat in a number of meetings with accountants and financial advisers feeling somewhat patronised! I am sure that there are plenty of women in a similar position to me (aged 55!).

    Ellie | 14/03/2018 | 3

    • Shares
    • Funds
    • GIA
    Holly Mackay's Response

  • How can I find a good financial adviser?

    Byron | Greater London | 01/03/2018 | 0

    • Shares
    • Funds
    Holly Mackay's Response

  • I am in the very lucky position of just having received a gift of £800k which I want to invest for our retirement. My husband and I are in our late 40s and aim to retire in around five years. We have 11 more years of school fees to fund, then hopefully university fees for two after that. I've put together a plan for us - can you have a look and see if it makes sense?

    Fiona | UK | 18/01/2018 | 6

    • Private Pension
    • Stocks and Shares ISA
    • Junior ISA
    • Shares
    • Cash
    • Online Investment Platforms
    Holly Mackay's Response

  • We have four grandchildren (2 English living in UK, and 2 Irish living in Eire). We have decided to start savings plans for their futures. Their ages are 18yrs, 11yrs, 8yrs and 4yrs respectively. My age is 75yrs, and my wife is a little older. What should we do, please?

    John | BKM | 01/01/2018 | 1

    • Junior ISA
    • Lifetime ISA
    • Shares
    • Funds
    Martin's Response

  • How do I start investing, buy stocks, bitcoins, etc with £100.00?

    Claudette | BDF | 18/11/2017 | 1

    • Shares
    • Other
    Holly Mackay's Response

  • I am a 59 yr old retired lady with no income but I have reasonable equity..is it worth starting a pension or is it too late?

    LL | NFK | 10/11/2017 | 2

    • Private Pension
    • Shares
    • Pension
    Cherry Reynard's Response

  • I have a delightful 12 year old daughter and she has just opened her first bank account. I am dreadful with money but I would like to know what I should teach her so that she does not pick up my bad financial habits. Do you have some top tips of things to teach our children so they are wise and responsible with money please?

    Louise | Greater London | 11/09/2017 | 1

    • Junior ISA
    • Shares
    • Cash
    Lesley James's Response

  • Is it worth using a financial adviser when it comes to switching pensions funds, or should I do the research and pick the funds myself? I am no expert in stocks and shares.

    Helen | Dorset | 10/08/2018 | 4

    • Private Pension
    • Shares
    • Funds
    Helena Wardle's Response

  • Should I be even thinking about the stock market?

    Lysa | Greater London | 06/09/2017 | 0

    • Stocks and Shares ISA
    • Shares
    Holly Mackay's Response