Opening a share-dealing account

To buy individual shares directly, you'll need a share-dealing account (sometimes within a Stocks & Shares ISA for tax efficiency) with a broker or investment platform. Opening one typically takes minutes online and requires identity verification, as with any financial account.

Understanding the costs

  • Dealing fees: a charge each time you buy or sell, either a flat fee or a percentage of the trade.
  • Platform fees: an ongoing charge (flat or percentage-based) for holding investments on the platform.
  • Stamp Duty Reserve Tax: a 0.5% tax on most UK share purchases (not sales), automatically applied at the point of purchase.
  • Foreign exchange fees: buying shares listed outside the UK often incurs a currency conversion charge on top of the dealing fee.

Frequent small trades can be eroded quickly by dealing fees — worth checking whether a platform's fee structure suits how often you plan to trade.

Common beginner mistakes

  • Putting a large proportion of savings into a small number of individual shares, rather than diversifying.
  • Trading frequently based on short-term price movements or news, which tends to increase costs without reliably improving returns.
  • Investing money that might be needed in the short term, when share prices can be volatile.
  • Not considering whether a fund or index tracker might achieve the same goal with less individual company risk and less ongoing research needed.

Individual shares vs funds

Buying individual shares means your outcome depends heavily on how those specific companies perform — concentrated risk that can pay off well or badly. Funds and ETFs spread that risk across many companies at once. Many investors use a core of diversified funds, with individual shares (if any) as a smaller, more speculative portion of their overall portfolio.

Key takeaways

  • A share-dealing account (ideally within an ISA) is needed to buy individual shares directly.
  • Dealing fees, platform charges and Stamp Duty Reserve Tax all affect real returns.
  • Concentrating money in a few shares carries more risk than diversified funds.
  • Frequent trading tends to increase costs without reliably improving results.