How To Invest In The Stock Market For Beginners UK

Those looking for a side hustle with greater risk and greater potential rewards may find this Stock Market for Beginners guide a useful read. This is one of the less popular side hustles, perhaps due to the misconception that it is an exclusive way of investing. 

Gone are the days when investing in stocks was reserved for millionaires with private brokers; the rise of digital currency and payments means that anyone can invest online at any time. There’s plenty of websites that offer guidance on the basics of trading on the stock market.

Whilst this availability opens the potential of the stock market for beginners, this does not come without its risk. In a similar way to betting on football or horse racing, placing money on a stock comes with the risk of that stock losing value and, subsequently, the investor losing their money. That is why it’s important to learn as much about this potential side hustle as possible before you start investing!

The Basic Concept Of Stocks And Shares

Before we dive into the mechanics of trading, let’s quickly cover off some basic information and terminology:

Stocks – Represent partial ownership of a company. 

Shares – These are units of the stock.

Trading – The process of buying and selling shares.

Investing – The practice of buying shares and sitting on them for longer periods.

Capital Gains – When you profit from selling shares.

Volatility – This is the rapid fluctuation of share prices.

Dividends – Company payments to shareholders from profits.

Investing In The Stock Market For Beginners

Newcomers to the potential of investing in the stock market should approach this side hustle with caution; unlike many of the other ways to make money online, this one includes risks. 

In short, the stock market allows buyers and sellers to trade shares in publicly listed companies in the hope of the company and stock value increasing. If this is the case, the stock can return dividends, or the owner can sell their shares for more than they originally paid for them; alternatively, the value of these shares could drop!

The stocks represent ownership of a company; as soon as you own stocks, you become a shareholder in said company.  If the company value then increases, the shareholder is rewarded by dividends and stock price appreciation, in which the value of said stock increases. 

The value of stocks can change on a minute-by-minute basis, which is where the risk is brought into stock market investment.

If you are looking to start investing in the stock market for the first time, these stock market for beginners UK tips could be useful:

Learn About The Stock Market

Stocks and shares can be traded at two places in the UK:

The London Stock Exchange

• The London Stock Exchange (LSE) is the main UK stock exchange.  It caters for large companies such as BP, Shell and Banks.  LSE incorporates the FTSE 100 (the biggest 100 companies) and the FTSE 250 (medium sized companies). 

Alternative Investment Market (AIM)

• AIM is a subsidiary of the LSE and is suited to smaller firms that are growth orientated.  These can suit speculative trading with higher risks.

Before investing in the stock market, it is vital you understand the basics of stock market investment. This includes familiarising yourself with all of the different investment vehicles, including stocks, bonds, Exchange Traded Funds (ETFs) and other financial terms. 

This is vital for anyone looking to invest money in the stock market, with guides like this stock market for beginners being vital during this stage.

Determine Goals And Risks

You need to have your eyes wide open and know what your objectives are before you begin trading in stocks and shares.  You must set your tolerance at an affordable level as it’s possible you could lose all of your budget.

Considerations should include deciding if you’re looking for short or long-term investments.  

If you are averse to risk, this may not be for you and something like matched betting, affiliate marketing or dropshipping. 

Invest In Different Assets

It can be helpful to diversify the investments in your portfolio when starting out, so long as you stay within your pre-arranged budget. 

This method of investing in the stock market for beginners may include further research into various asset classes, industries, and geographical locations to invest in. 

Similar to multi-stake techniques in sports betting like the Heinz bet, the idea of investing in various different stock markets can potentially spread and mitigate risk.

Strategic Investments

When researching investing in the stock market for beginners, you may come across various strategies and methods that are popular with investors. These involve their own risks and advantages, though they could be useful for a first-time investor looking to learn more about the stock market. 

One such strategy is called Dollar-Cost Averaging; this involves investing the same amount of money regularly, no matter the conditions of the market and can counteract market volatility. 

Benefits Of Investing In The Stock Markets

Although this side hustle involves a lot more risk than other ways of making money, there are a number of benefits to investing in the stock market for beginners. 

Along with the obvious financial opportunity of investing, newcomers can learn more through investing, resulting in a greater understanding of the market and the companies involved.

Capital Growth Opportunity

The primary concept of investing in the UK stock market for beginners is the hope of a stock value increasing to the point that the investor can sell it for a profit. This passive method of creating a profit is great for anyone, whether you’re looking to make money on maternity leave or alongside your main source of income. 

The increase of a stock value is never guaranteed, with stock prices constantly fluctuating, so it is wise never to rely entirely on stock investments.

Company Dividends

When you buy stocks in a company, you then own a percentage of the company.  This can provide updates and reports on the company and a say in certain decisions. With these stocks, the shareholder will often receive dividends based on the company’s earnings alongside the capital growth in the value of their stocks. 

Owning shares in a company can provide a steady stream of income along with the potential to sell said shares at a profit at will, though this is never guaranteed. 

Stock Market Accessibility

Another advantage of investing in the stock market for beginners is the ability for stockholders to buy, sell and monitor shares at their convenience. 

Similar to the side hustle idea of selling on Fiverr, shares on the stock market can be managed with a range of internet-connected devices at the holders’ convenience. 

Stock shares are usually more liquid than most investment methods, which provides the holder the ability to buy or sell whenever they choose.

Potential Cons Of Investing In The Stock Market

Along with the great potential we have highlighted, there are a number of potential downsides and risks included in this investing method. It is important to fully understand the risk that investing in the stock market for beginners includes: 

Volatile Markets

There’s no sure fire way to know which way stock values will go and no guarantees, a little like sports betting.  Share prices continually fluctuate which can lead to nervous times for people new to investing on the stock markets.  

Sometimes, investors will see share prices drop and their knee jerk reaction is to sell.  This can mitigate losses but it could also lead to investors missing out on profits.

Research And Time Requirements

Another potential disadvantage to investing in the stock market for beginners is the time required to make the most of investments. Along with the process of researching the stock market, industries, locations and individual companies, shareholders will need to spend time monitoring a share value. 

Investing in the right stock can be worth it, though newcomers to the stock market should be aware of the time and research this system requires to give it the highest potential to be successful. 

Summary

Now that you know a little bit more about how to invest in the stock market and the various factors that should be taken into account when investing, the choice is yours. 

This method of increasing your capital comes with its own risks that should be taken into account before, during and after making investments. We wish you good luck in any future investment you choose to make on the stock market. 

There are plenty of other ways in which people can invest their money, with various levels of risk and reward included. If you have not found this stock market for beginners UK guide helpful, we provide information on a range of other side hustles.

If the dedication of time or money involved with investing in the stock market for beginners concerns you, there are plenty of other ways to source a bit of extra money.

Some of the less intensive side hustles that don’t require much outlay include matched betting, selling on Fiverr, print-on-demand t-shirt selling, being a YouTuber or freelancing in a variety of industries.

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