Best Stocks for Beginners UK to Watch
Starting out with investing can be daunting, especially when share prices for some companies can exceed hundreds of dollars or pounds. This article explains how to start investing and offers a list of some of the best stocks for beginners UK with little money.
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How to Invest in Stocks with Little Money
Investing, in its simplest form, is a way to try and grow your capital and/or generate interest on your money in the form of dividends. Unfortunately, there are no guarantees on what the market will do in the future and if your investments perform poorly, it is possible to end up losing money.
Investing in a stock means buying a share of a company which represents ownership in the business. A business that performs well and becomes more valuable can often see a rise in its share price, meaning that investors who bought in early could potentially generate a return on their investment.
How does investing generate interest?
Imagine an investor buys a share of a US company that produces electronic devices for $10, and the company is valued at $50 million. The company expands its operations to South America, where it quickly gains market share and operates with high profits. Subsequently, the company’s valuation rises to $55 million, an increase of 10%. The share price is now $11 (a 10% increase). The investor is now sitting on $1 of profit. Conversely, if the expansion to South America went poorly and the company’s valuation dropped to $45 million, the investor would be left with $9, a 10% loss.
Investing with little money
Some brokers allow their customers to buy fractions of shares, which represent a part of a given stock. This allows an investor to buy some of the best stocks for beginners with little money, as they can put up half or a quarter of the money to end up with 0.5 or 0.25 of a full share. Additionally, investors can choose to focus on stocks with lower prices.
Best Stocks for Beginners UK to Watch
The following companies make up a list of some of the best stocks for beginners UK. Though these are well-established businesses, it should be noted that ‘best’ is subjective, and there is no guarantee an investment in any of these companies will be profitable.
These stocks were chosen as some of the best stocks for beginners with little money because they are well-known, have high trading volume leading to better pricing and can be bought with fractional shares.
- Amazon (AMZN) – Online Retail and Media Giant
- Alphabet (GOOG)– Industry Leading Search Engine and Advertising Services
- Tesla (TSLA) – Electric Car and Battery Solution Producer
Amazon (AMZN)
It might be safe to say that Amazon is one of the most famous companies worldwide. What some might not know, is that Amazon once began as an online bookstore operating from its founder’s garage. Jeff Bezos, who founded Amazon in 1994, was formerly a vice president at Wall Street firm D.E. Shaw & Co., and thus no stranger to the world of business. Within its first year, Amazon already reached $20,000 in revenue per week. Amazon had its IPO in 1995.
These days, Amazon does much more than selling books. Its main revenue source stems from its e-commerce platform Amazon.com, on which all kinds of items from books and movies, to food, jewellery, and musical instruments are bought and sold. Amazon has made many acquisitions in recent years, buying up for example the streaming sites Twitch, IMDb, Goodreads and Audible. In 2017, Amazon ventured into the food industry by buying Whole Foods for $13.7 billion.
Currently, Amazon is sitting at a market capitalization of around $1.93 trillion, more than double the lows it experienced at the end of 2022. The company ranks as the 6th most valuable company in the world.
Alphabet Inc. is the conglomerate holding company which owns Google. It was created during a restructuring in 2015, though Google itself is much older, having been founded in 1998. The company attracted around $1,000,000 in funding from several Angel investors, among which Jeff Bezos. In 1999, just a year later, Google conducted a funding round in which it attracted $25 million in capital from numerous venture capital firms.
Google is perhaps best known for Google Search, its proprietary search engine which currently powers a large share of global search queries and remains one of Google’s largest sources of revenue. Initially, Google Search used an algorithm called PageRank, which calculated a website’s relative importance based on how many links led to its main page. The search engine quickly became popular due to the accuracy of its search results.
How Google earns most of its revenue is through advertisements displayed on Google Search and YouTube. Besides that, Google provides many software solutions to consumers like Gmail, Google Calendar, Google Maps, and Google Drive. Through these services, Google collects personal data, which it sells to advertisers.
Currently, Google has a market capitalization of around $1.95 trillion, making it the fourth most valuable company in the world.
Tesla (TSLA)
Presently well-known for its production of solely electric cars, Tesla was founded in 2003 by Martin Eberhard and Marc Tarpenning. In 2004 Elon Musk joined the company, who later invested nearly his entire personal fortune into Tesla. The company began selling its first cars the same year and revealed the Model S a year later in 2009.
Tesla has a wide range of electric automobiles which it sells to consumers, among which are the Tesla Model X, the Model 3, and the Model S. The company has several new models of cars in development. Besides being fully electric, Tesla’s cars are also equipped with advanced sensors and computers to aid drivers. Tesla is well-known for its self-driving technology, which allows drivers to take their hands off the wheel in certain situations and let the car drive itself.
Other services offered by Tesla are subscription-based navigation and data feeds, vehicle servicing and repair, and charging solutions. Besides cars, Tesla has developed various battery solutions for consumers at home to be used in combination with solar panels and smart energy meters.
Currently, Tesla is sitting at a market capitalization of roughly $554 billion, making it the 14th most valuable company in the world.
How to Invest in Stocks for Beginners
With Admirals, you can trade and invest in over 3,000 stocks and ETFs with the following commissions:
- UK stocks and ETFs – 0.1% of trade value, 1 GBP minimum commission.
- US stocks and ETFs – From $0.02 per share, 1 USD minimum commission.
- France/Germany stocks and ETFs - 0.1% of trade value, 1 EUR minimum commission.
You can learn more about trading and investing commissions on the Admirals Contract Specification page. You can search for global stocks and ETFs from the MT5 web platform and invest in four steps:
- Open an account with Admirals.
- Click on Trade on one of your live or demo trading accounts to open the web platform.
- Search for your symbol at the top of the search window.
- Click Create New Order in the bottom window to open a trading ticket to input your trade size, stop loss and take profit level.
Conclusion
To conclude, investors can buy some of the best stocks for beginners UK even if they don’t have a lot of money. To do this, investors should consider brokers that offer fractional shares, or focus on stocks that have a relatively low share price. Of course, investing involves wins and losses so you should not invest with money that you cannot afford to lose.
Continue Reading:
- Best Shares to Buy
- Best Monthly Dividend Stocks
- Best Stocks for Long-Term Growth
- 6 Short Term Investments
- How to Trade the US Stock Market
- The CFD Trading Guide
FAQs on Best Stocks for Beginners UK
What are the best stocks to buy for beginners with little money?
An investor must take their time to research companies before investing. Some stocks for beginners to learn about include well-known companies like Amazon, Alphabet, and Tesla. These are well-known companies that can be invested in with fractional shares.
How can a beginner invest in stocks with little money?
An investor with little money can invest in the best stocks by buying fractional shares of some of the most well-known companies. Many brokers offer the ability to buy a fraction of a share, meaning an investor can invest just $50 to buy a quarter of a stock that would regularly cost $200.
What are fractional shares?
Fractional shares are ownership of a piece of a share. A fractional share lowers the minimum capital requirement of a $200 stock for the entire share to just (for example) $20, which leaves the investor with a 0.1 fractional share.
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