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.