How to Invest in Stocks and Shares

Investing in stocks is one of the most common and effective ways to build long-term wealth. Whether you're aiming to grow a pension pot, earn passive income or beat inflation, the stock market offers a wide range of opportunities.

This guide explains what stock investing is, why people do it, and a simple step-by-step guide to getting started.

What Is Stock Investment and Why Do People Invest?

When you invest in stocks, you’re buying shares in a company, making you a part-owner. If the company performs well, your shares can increase in value, and you might receive dividends—a share of the profits.

People invest to:     

• Grow their wealth over time

• Generate income from dividends

• Beat inflation

• Build a retirement fund

• Diversify away from cash and savings accounts

Investing always carries risk, but historically, the stock market has outperformed most other forms of long-term saving.

How to Invest in Stocks – Step by Step (UK)

1. Decide on Your Investment Goals

Think about:

• Why you're investing (e.g. retirement, house deposit)

• Your time frame (short vs long term)

• Your risk tolerance

The longer you can leave your money invested, the more you can ride out market ups and downs.

2. Understand the Risks

Stock prices can go up and down. You could lose money. Unlike cash savings, investments are not protected from market volatility. But with a long-term horizon and proper diversification, risk can be managed.

3. Choose How You’ll Invest

You can invest in:

• Individual shares – Buying shares in specific companies

• Funds – A collection of shares (e.g. index funds or mutual funds)

• ETFs (Exchange-Traded Funds) – Like funds, but traded on the stock exchange

• Investment trusts – Closed-ended funds with a fixed number of shares

• Robo-advisors – Automated platforms that build and manage a portfolio for you

Funds and ETFs are popular for beginners because they offer built-in diversification.

4. Open an Investment Account

You’ll need to open an account with a stockbroker or investment platform. Common UK options include:

• Hargreaves Lansdown

• AJ Bell

• Freetrade

• Trading 212

• Vanguard

• Interactive Investor

Choose based on fees, range of investments and user experience. For tax efficiency, consider using a:

• Stocks & Shares ISA – No tax on gains or dividends

• SIPP (Self-Invested Personal Pension) – For retirement investing, with tax relief

5. Deposit Money into Your Account

Transfer funds from your bank account. Many platforms let you invest from as little as £1.

6. Choose What to Invest In

You can pick:

• Specific UK or global stocks (e.g. Tesco, Apple, HSBC)

• Broad market index funds (e.g. FTSE 100, S&P 500)

• Sector-specific ETFs (e.g. technology, energy, healthcare)

If you’re unsure, a low-cost global index fund is often a good starting point for beginners.

7. Buy Your First Investment

Once you've selected a stock or fund, enter the amount and confirm your order. Some platforms offer fractional shares, letting you invest with small amounts.

8. Monitor but Don’t Panic

The market fluctuates. Don’t check your portfolio too often. Stick to your plan and avoid emotional decisions.

Different Investment Options Explained

• Active Investing – You choose individual shares and time your trades. More hands-on and higher risk.

• Passive Investing – You invest in a fund that tracks a market index. Lower cost and lower maintenance.

• Dividend Investing – Focuses on shares that pay regular income

• Growth Investing – Aims for capital appreciation in high-growth companies

• Thematic Investing – Focus on long-term trends (e.g. green energy, AI)

Final Thoughts

Investing in stocks can feel overwhelming, but it’s never been easier to get started. With the right approach and mindset, you can build a portfolio that matches your goals and time frame. Start small, stay consistent, and let time do the heavy lifting.

If in doubt, speak to an independent financial adviser—especially before making large or complex investments.