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How To Make Money

How To Make Money From Share Dealing


If a company is looking to increase its revenue it can become a Public Limited Company (PLC) and sell shares to investors. This allows you to make money trading stocks online. Each share has a certain value when you buy it, but the value can go up or down in the time that you own it.


How do I trade stocks in the UK?

As an individual, you can buy shares yourself or pool your money with a group of investors. This is known as a fund. Funds take money from the investors and put it into various assets, which include money, shares, bonds or property.

An investment service will manage your money. Your pool will have a dedicated fund manager who will pick out the investments and buy and sell on your behalf.

This is less risky than putting all your money into one company as a pooled investment is spread around. If one investment doesn’t do well you haven’t lost everything, as you could if you invest in just one company. You also reduce the costs involved in trading because they are shared between the investors in the pool.

Finally, if you don’t have the time or you don’t want to do the work yourself, you have the management company to do the work for you. It is a shrewd, less risky method of investing if you’re doing it for the first time.

There are two types of managed fund you can choose from:


Passive Management (Tracker Funds)

Tracker funds use a market index tracker to see how your shares are doing. The market index in the UK is the FTSE 100, which contains 100 of the largest companies based on their share value. Your investments will go up and down with the FTSE index. Tracker funds normally make less than active funds, but the management costs are cheaper.


Active Management

An active management pool will have a fund manager who constantly researches the market to buy the shares they believe will be a good investment. The fund manager’s job is to get you better returns than you would with tracker funds or better than average growth so that you ‘beat the market.


What are pooled shares investments?

There are a variety of investments you can make through pool investing and they include:

  • ISAs – Off the shelf stocks and shares containing investments in funds
  • With-Profit Trusts – Medium- to long-term investment funds
  • Investment Trusts – Funds that are publicly listed as companies on the London Stock Exchange
  • OEICs and Unit Trusts – Professionally managed collective investment funds
  • Tracker Funds – A passive investment with a lower expense ratio

What is the benefit of owning your own shares?

Owning your own shares is riskier than a pooled investment. It is recommended, when starting out, that you ‘drip feed’ your investment funds into a company. You can do this by splitting the amount of money you have to invest into two.

For example, if you have £15,000 in total you can buy £7,500 worth of shares one month and wait until the next month to invest the other £7,500. You might find that the price has fallen, which means in the second month you get more shares for your money.

You can spread the money throughout the year or invest in different years, but be aware that drip feeding will make management funds higher.


How can I buy shares?

You can buy shares for any company that is listed on an exchange, like the London Stock Exchange or the Alternative Investment Market.

These are the steps you must follow:

  1. Set up a trading account
  2. Deposit the amount of money you wish to invest in shares
  3. Use your account to identify and purchase shares
  4. Monitor your investments in your online portfolio.

There will be charges to pay for the running and maintenance of your portfolio and these are:

  • Account Fee – Normally you will be charged a fee payable monthly or yearly to use your account platform. Some companies let you use the platform free of charge if you have a large account or you make a certain amount of trades.
  • Stamp Duty – Currently, you must pay £1 if your transactions are £10,000 and over and 0.5% stamp duty when you buy UK shares.
  • Buying and Selling Fees – There are always fees to pay when you buy or sell shares and the amount will vary depending on the trader.
  • Inactivity Fees – Some companies may charge you an inactivity fee if you haven’t made a certain amount of trades within a set period. If you don’t think your trading will be regular look for a platform that doesn’t make this charge.




Where can I invest in shares?

See below for three examples of platforms that suit varying investment needs for newcomers. Dependent on your budget and how often you’re looking to trade, these options should provide you with a good starting point.


Hargreaves Lansdown

This platform doesn’t have the cheapest buying and selling charges, however, there’s no platform fee for shares, it has a great on-site knowledge base and the website is easy to use for first-time investors.

Think carefully before signing up if you aren’t in it for the long term as if you leave there’s a £25 transfer out fee per holding.

  • Platform Charge: £0
  • Transfer Out Fee: £25 (per holding)
  • Buying/Selling: 0-9 deals £11.95, £8.95 if there were 10+ deals the previous month, £5.95 if there were 20+ deals the previous month


AJ Bell

With no platform fee and the cheapest dealing charges if you make 10+ trades a month, AJ Bell is worth looking at as a start point. Their service offers a range of information that will help those that are new to investing. It also allows a lot of flexibility, with an intuitive mobile app.

  • Platform Charge: £0
  • Transfer Out Fee: £25 (per holding)
  • Buying/Selling: 0-9 deals £9.95, 10+ deals £4.95


Interactive Investor

With Interactive Investor you’ll receive cheaper trades as you make more each month. There’s also the incentive of two free trades per quarter.

For example, if you make 20 trades in your first year it will cost a total of £200 (factoring in 8 free trades, 12 trades at £10 each and the platform fee). While it’s more expensive than the likes of AJ Bell (see above) there are more options to allow you to grow your investments as you gain confidence.

  • Platform Charge: £20 (per quarter)
  • Transfer Out Fee: £15 (per holding)
  • Buying/Selling: 0-9 deals £10, £5 if 10+ deals per month