The stock market is where shares in companies are traded. Companies issue shares in order to raise funds by selling them to investors. When the company does well, it can pay dividends to its shareholders. Over the long term, shares have historically generated higher returns than cash savings. How to invest in the stock market in the UK.

It’s important to remember that you can lose money in the stock market, as share prices can fall as well as rise. However, if you invest for the long-term, research your investments and avoid making impulsive decisions based on fear or greed, you should see returns.

How to Invest in the Stock Market in the UK: Beginner’s Guide

You can buy shares directly with a provider or via a platform, such as Freetrade. Many providers offer online applications that can be completed in minutes and which will ask you to provide basic information such as your address and bank account details. You may also be required to complete a few documents to verify your identity.

Many investors prefer to leave the choice of shares and other investments to experts, by investing in a fund. A fund can hold a range of shares, bonds and gilts from around the world, which are carefully picked and monitored by professional managers. Funds can be held in a tax wrapper, such as an Individual Savings Account (ISA) or Pension, or in a general investment account (GIA).

Before you invest in the stock market, it’s essential to set clear financial goals and to create an investment strategy that aligns with your objectives. You might want to take advantage of a high dividend yield, or you may be looking for growth. Whatever your goal, investing regularly is likely to be the most effective method, as it allows you to benefit from ‘pound cost averaging’ and smooth out the highs and lows of the markets.