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Hello I'm 21 years old and I recently moved to London currently employed as an Salesforce Administrator at Heathrow Airport. Everyone here talks about owning shares investing in different types of market. My question might be ridiculously simple for you but is difficult for me. What is the process of getting your first share?

I don't mind whether it's 1 pence or 100 pounds share, I would love to have it. Every website I checked already assumes you know everything about the stock market.

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    I don't mind whether it's 1pence or 100pounds share, I would love to have it If this is your mantra then stay put where you are. Just others do it doesn't mean you should do it. You are 21, there is ample time. Best would be learn about the stock market rather than jumping into a dark well assuming a safety net is present. – DumbCoder Nov 3 '15 at 11:29
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    Maybe I've worded it wrong. Getting that share would help me with familiarizing myself with the whole process. Why isn't 21 the best time to start getting shares when there is no pressure from kids or house credits. It's just practice. – Greg Nov 3 '15 at 11:50
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    what is your motivation for buying this share? shares are there to allow you to own part of a company so that you can benefit from its future profits (sort of). Do you want to own part of a company? – MD-Tech Nov 3 '15 at 12:45
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    In the future I would want to own a part of a company, The first share for me isn't about financial gain, More about the first step into the industry followed by many more. Any book recommendations or Broker Accounts suggestions would be appreciated. – Greg Nov 3 '15 at 13:01
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    Investopedia Stock Simulator. I would start there. – Chris Cirefice Nov 4 '15 at 15:06
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I think I understand what you're trying to achieve. You just want to see how it "feels" to own a share, right? To go through the process of buying and holding, and eventually selling, be it at a loss or at a gain.

Frankly, my primary advice is: Just do it on paper! Just decide, for whatever reason, which stocks to buy, in what amount, subtract 1% for commissions (I'm intentionally staying on the higher side here), and keep track of the price changes daily.

Instead of doing it on mere paper, some brokers offer you a demo account where you can practice your paper trading in the same way you would use a live account. As far as I know, Interactive Brokers and Saxo Bank offer such demo accounts, go look around on their web pages.

The problem about doing it for real is that many of the better brokers, such as the two I mentioned, have relatively high minimum funding limits. You need to send a few thousand pounds to your brokerage account before you can even use it. Of course, you don't need to invest it all, but still, the cash has to be there.

Especially for some younger and inexperienced investors, this can seduce them to gambling most of their money away. Which is why I would not advise you to actually invest in this way. It will be expensive but if it's just for trying it on one share, use your local principal bank for the trade.

Hope this gets you started!

  • damn you pipped me to it – MD-Tech Nov 3 '15 at 13:37
  • Thank you for your answer, that is exactly what I was going for. I want to get familiar with the process and actually own a share so I can track it and see what happens to it. Couple of questions though, Doing it on paper sounds like a reasonable way to start but what does it mean by doing it through my local principal bank. I live in the UK and the only bank that offers a Broker account is Barclays. – Greg Nov 3 '15 at 13:40
  • @Greg I really don't know the UK situation in any detail. So you couldn't open an account with RBS, Lloyds, HSBC etc. and trade through it? Have a look at this article, maybe it helps: theguardian.com/money/2010/jun/19/share-trading-for-beginners – vic Nov 3 '15 at 13:45
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    I'd also look into stock market games. There are a number of them that essentially go through the entire process for real except that you don't have actual stocks. But it lets you see on a day-to-day basis how good your decisions were. – David Grinberg Nov 3 '15 at 14:50
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    @greg it should be a lot more accessible than that. Take a look at, eg, the Halifax share dealing accounts, which IIRC are fairly straightforward to set up, paperwork aside, and don't have a substantial minimum investment. – Andrew Nov 8 '15 at 10:02
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Let's handle this as a "proof of concept" (POC); OP wants to buy 1 share of anything just to prove that they can do it before doing the months of painstaking analysis that is required before buying shares as an investment. I will also assume that the risks and costs of ownership and taxes would be included in OP's future analyses.

To trade a stock you need a financed broker account and a way to place orders. Open a dealing account, NOT an options or CFD etc. account, with a broker. I chose a broker who I was confident that I could trust, others will tell you to look for brokers based on cost or other metrics. In the end you need to be happy that you can get what you want out of your broker, that is likely to include some modicum of trust since you will be keeping money with them.

When you create this account they will ask for your bank account details (plus a few other details to prevent fraud, insider trading, money laundering etc.) and may also ask for a minimum deposit. Either deposit enough to cover the price of your share plus taxes and the broker's commission, plus a little extra to be on the safe side as prices move for every trade, including yours, or the minimum if it is higher.

Once you have an account the broker will provide an interface through which to buy the share. This will usually either be a web interface, a phone number, or a fax number. They will also provide you with details of how their orders are structured. The simplest type of order is a "market order". This tells the broker that you want to buy your shares at the market price rather than specifying only to buy at a given price. After you have sent that order the broker will buy the share from the market, deduct the price plus tax and her commission from your account and credit your account with your share.

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  • Get a brokerage account. This can be at your regular bank or at a brokerage company. There can be big differences in fees - traditional banks often have monthly/yearly account fees as well as higher order fees.
  • Using the account (or rather the web interface to it), place a stock market buy order. You'll have to specify the marketplace (the London Stock Exchange will be the default for you, but some brokerages will let you choose others), the number of shares you want to buy, optionally a limit (the maximum price per share you want to pay) and how long the order should be active.
  • There will be an order fee, which may depend on the marketplace and order size.
  • The market will match up your buy order with other people's sell orders and fulfill the order, usually within minutes or even seconds when you do not specify a limit.
  • Congratulations, you now own one or more shares!
  • You can sell the shares at a later time using the same procedure (except a sell order) and hopefully for a higher price.
  • If the company issues a dividend then you will receive some money once a year.
  • You're entitled to an invitation to the company's annual general meeting.
  • If the company is acquired or merges with another company, your shares may be automatically sold and/or converted to shares of the acquiring/merging company.
  • Thank you very much that was very helpful. I didn't know there were so many costs involved in the whole process. – Greg Nov 3 '15 at 13:48
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    There's a fee to buy or sell. Find a bank/broker that will not charge you a fee if your account is below some minimum. Otherwise, like a checking account below minimum balance, the fees will cost you. – JoeTaxpayer Nov 3 '15 at 14:31
  • Not sure how this is handled in the UK, but presumably/possibly: you'll also find that the bank withholds some tax/sends tax forms or certifications and you may have to fill out more forms in your tax declaration. This is something that is usually not simulated by the demo accounts... – cbeleites Nov 4 '15 at 19:39
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Here's a different take:

Look through the lists of companies that offer shareholder perks. Here's one from Hargreaves Lansdown. See if you can find one that you already spend money with with a low required shareholding where the perks would actually be usable. Note that in your case, being curious about the whole thing and based in London, you don't have to rule out the AGM-based perks, unlike me.

My reason for this is simple: with 3 out of 4 of the companies we bought shares in directly (all for the perks), we've made several times the dividend in savings on money we would have spent anyway (either with the company in which we bought shares or a direct competitor). This means that you can actually make back the purchase price plus dealing fee quite quickly (probably in 2/4 in our case), and you still have the shares. We've found that pub/restaurant/hotel brands work well if you use them or their equivalents anyway.

Caveats:

  • For this to work you generally need to be a real shareholder, not holding your shares in a nominee account.
  • As always with investments, only invest what you can afford, value can go down (even to 0), etc. even though the companies involved are generally well-established.
  • They can always stop or downgrade the perks.

It's more enjoyable than holding a handful of shares in a company you don't care about, and if you want to read the annual reports you can relate this to your own experience, which might interest you given your obvious curiosity.

  • I presume there is already a list on the web of which companies offer particularly interesting or valuable perquisites somewhere on the web... probably several. – keshlam Nov 3 '15 at 18:28
  • @keshlam I've linked ot the one I know about (the link changes quite frequently, as does the content, but there's enough information to search for it). I know the Telegraph have also published a list but it's not meant to be complete. – Chris H Nov 3 '15 at 21:04
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I actually use a service called etorro, there are social trading and normal trading. It allows me to put money into the service, follow other people or just pick my own shares to buy and sell with a load other features.

It does cost a small amount to extract money but the app is really good, the website is well designed and I've made a bit of money being 23, and in the It industry with no financial training ever it seems like a good way to start.

  • It comes in app for and their web portal, also there is free test trading account attached to your account to trade without read money! – Dean Meehan Nov 4 '15 at 9:48
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You could also look up stock trading games. Basically, you get x amount of "money" and "invest" it in stocks, trying to get the highest return of the group in y amount of time. They are a decent way to get used to how different types of trades work without having to risk any real money, while having enough "money" to invest that you can try different things. Of course, as others have mentioned they may or may not include all the nuances, like minimum investments and brokerage fees, but at least you can learn and see how the different buying and selling options work.

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