Trading in shares can be a good way to make a return on your money, but, unless you come from a financial services background yourself and have extensive trading knowledge and experience, you must consult an expert in financial investing before you invest any of your money into stocks and shares.

One of the reasons for this, is that there are no guarantees when you invest in the stock market, and your money can go up as well as down in value. Depending on your circumstances and what you want to achieve in the future, investing in shares may not be right for you, and so it’s best to speak to the experts before you go any further.

What is a share?

A share is simply a divided up unit of the value of a company. For example, if a company is worth £100 million, and there are 50 million shares, then each share is worth £2 (usually listed as 200p). Those shares can and do go up and down in value for various reasons, not always reasons connected with the company either - for example, the UK and worldwide economy can influence the share price of a company.

Companies issue shares to raise money and investors (like you) buy shares in businesses because they believe the company will do well and they want to ‘share’ in its success.

How do I own shares?

You can either:-

  1. Own shares yourself; or

  2. Pool your money with other people in a collective investment known as a fund

For more information on the differences, you should speak to us to find out more, so that we can get to you know and make sure we give you the right advice tailored to your circumstances.

How long should I keep hold of my shares?

That depends entirely on what happens to the value of those shares while you’re in possession of them, and what you want to achieve overall in terms of increasing your investment. Our clients get the best possible advice coupled with managed portfolios and regular reviews, so we can get the most well informed and currently researched advice to them at all times.

Should I have shares in more than one company?

If you think about it, if you’ve only invested in one company and if that company gets into difficulty, then you could lose some or all of your money. Of course, that’s not the whole story - it also depends on the type of company, the sector it operates in, the stability of the marketplace and of the economy in general …....in other words, because there are multiple factors to consider, there are no easy answers to give.

We’re aware that the ‘standard’ and widely accepted advice here is not to put all your eggs in one basket and that it’s better to invest in multiple companies - however, that answer is too broad and simplistic to be good advice for everyone.

Instead, we’d rather speak to you or see you in person so that we can be certain we’ve given you the best possible advice.

Should I invest in an ISA?

If you're new to investing, an ISA is likely to be your best starting point for the first £20,000 (the current ISA limit). This is because it's a great way to reap tax benefits, at the same time as investing your money.

Talk to us before making any decisions - our independent advisers offer whole of market advice, meaning we have access to the majority of financial providers and their various products, and meaning you’re likely to get a better deal by working with us.

Can I make money by investing in shares?

There are two ways you could potentially make money from investing in shares:

  1. If shares increase in value, then you could make a profit when you sell them. 

  2. If they pay dividends.

Dividends are a bit like interest on a savings account. If a company makes a profit, it gives some of it back to you - it could be on a regular basis, or as a one-off. In the same way that you have a personal savings allowance for interest on savings, you also have a dividends allowance each tax year, where the first £2,000 you receive is tax free.

Any dividends received above this allowance will be taxed - at 7.5% for basic-rate taxpayers, 32.5% for higher-rate taxpayers and 38.1% for additional-rate taxpayers.

If you're a higher or additional-rate taxpayer who receives taxable dividend income, then you must inform HMRC.

In order to ensure you’re declaring everything you should on your tax self assessment forms, make sure you’re taking the appropriate advice.

How do I buy shares?

It’s actually relatively simple to buy shares, however before jumping in you should take advice to make sure that actually buying shares is, in fact, the right move for you to make.

The easiest and cheapest way to buy shares is online, from what's known as a 'share dealing platform'. These platforms allow you to buy shares from any company listed on the stock exchange, and also from various overseas exchanges too.

On the London Stock Exchange, you’ll get a whole host of companies listed, including the really big players such as Marks & Spencer. Then there's also the Alternative Investment Market (AIM), which lists smaller developing companies that you may not have heard of. Unless this is a genuine area of expertise for you, you won’t know which companies are the best ones for you to invest in - and that’s where we come in. (LINK to make an appointment / book a callback form)

Which companies can I buy shares in?

Companies get listed on the stock exchange after they have completed an Initial Public Offering, a process which basically takes the company from being private to public – allowing other people to buy shares in it.

So the basic principle is, if the company is listed on an exchange, you can buy a share in it.

You'll always be able to buy and sell shares trading on the stock market. The price of shares is partially determined by the supply and demand from prospective buyers and sellers at any particular time – high demand will drive up the cost (while low demand will do the opposite). Other factors can influence share prices, such as worldwide and local economic forecasts - again, working with an expert investment company who manage your portfolio for you is your best bet to a successful share trading experience.

Do I need a trading account to buy shares?

If you’re buying and selling shares yourself, yes. Remember though, this may not be your best route to success and you should always consult an expert before you begin.

Do you still get paper share certificates?

Not any more, nowadays all shares are held and traded online. In past years, all shares were traded through paper certificates. Nowadays, trading in paper shares is a more expensive and cumbersome option. Online trading is quicker and easier for not only you but also the stockbroker, who may in fact charge you extra for trading in paper shares.

If you do have old paper shares to convert, most online platforms will now allow you to convert those old shares, however do check on the charges to do so.

Will I be charged for trading in shares?

The simple answer here is yes, there are various charges to look out for if you’re considering actively trading in shares. These include:

  • Account fee: Platforms may charge a monthly, quarterly or annual account fee, but in some cases this is waived if you make a minimum number of trades, or your account is of a certain size.

  • Inactivity fee: An inactivity fee may be charged unless you make a certain number of trades within a set period. Check the offers when you sign up though, as some platforms offer to waive these fees to tempt new clients.

  • Buying/selling shares: there’s a fee you pay each time you buy or sell shares, so make sure you always know what this is so you can take it into consideration. You may be able to find a discount for frequent traders.

Do I Pay Stamp Duty on shares? 

When purchasing UK shares expect to pay 0.5% stamp duty and an extra £1 on transactions above £10,000.

If I inherited shares, what should I do with them?

If the shares are held in an online account, then firstly you'll need to contact the platform on which the shares are held. 

The shares are valued from the date of death of the person who held them.

Executors of the estate (the person/s officially dealing with the deceased person's estate) have the choice of selling these investments and receiving cash, or transferring the ownership to one or more of the beneficiaries, but can only take any actions once the probate has been granted (ie, when the administration of the deceased person's estate has been sorted).

Paper share certificates are slightly more difficult to sort out, and will therefore probably cost more, but if you approach a platform it will probably be able to help you value them and will also be able to help you with the administration. Again, however, it’s only the executor(s) who will be able to take any actions.

How do I hold shares?

If you decide to trade your shares online, then you can open what's called a 'nominee account'. This allows you to own shares without becoming involved in any of the paperwork.

A platform will set up the nominee account and hold the shares on your behalf. You are still the legal owner of the shares, but your name will not appear on the company’s share register. There’s also the option to hold your shares in a stocks & shares ISA or self invested personal pension (SIPP) wrapper.

Because there are multiple options available to you, and because each of these options has different implications, your best course of action is to seek professional financial advice before you start. That way you’ll know for sure that you’re heading in the right direction from the outset.

How do I sell shares?

Once again, you have multiple options available to you. If you have set up a nominee account (as explained above), you don't hold the share certificates, so you have to sell the shares through the platform you bought them from.

When you sell your shares you'll have two options, you can either:

1. Sell your shares by number, or

2. Sell your shares by their value

Once you place the deal you will be shown a quoted price for the sale of the shares. You normally have a limited time period to decide (eg, 15 seconds), and the price quoted will not necessarily be as high as the price you bought them for. If you accept, then any money you have made from the sale will show in the account.

As always, it’s best that you’re only selling your shares after first verifying with your financial adviser that it’s the right move for you to make.

Start planning your future. Speak to us today.

Contact Us

Seventy Financial Planning
The Apple Store, Haggs Farm,
Haggs Road, Follifoot, Harrogate,
HG3 1EQ

01423 611004

[email protected]

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