With record low prices on many products at the present time, now is a great time to be investing in the British stock market. Risks are slightly higher than normal but careful choices stand to offer very good long-term benefits. Furthermore, the low prices mean that it’s a good time for newcomers to explore different sectors without risking too much money in any one area. If you’re new to investing in British stocks, what do you need to know? What’s the best way to get started and where should you exercise caution?
An island nation
One of the key factors in shaping the performance of British stocks is the fact that this is an island nation. Because it’s relatively small and lacks the resources to be self-sufficient in every area, a great deal depends on imports, and those imports have to travel by air or sea. This means that issues with supply routes can have a big impact on profits and therefore on stock values. When you buy, you need to consider not only the company itself but also its supply chain and how resilient the company can be if something goes wrong with that.
Strong sectors
Although stock prices are always in flux, some parts of the UK marketplace offer more security or better growth prospects than others. The Scottish renewable energy sector, for instance, now produces more electricity than Scots actually use and is expanding to support other areas. Whisky and salmon are strong exports with expanding overseas markets. In England, a housing shortage means that, although there may be temporary disruption around Brexit, the long-term trends for construction look very good. It’s also worth considering sectors with high prestige, such as London-based tailoring.
Finding the right stocks
When you’re new to the market, the first thing you will need to do is find a reliable broker. You can then decide whether you want to invest in stocks directly or by way of a fund that will allow you to spread the risk. A trade publication like Hammerstone will help you to keep track of what’s happening in the markets – you can visit them here. The ideal choices will never be the same for everybody – you’ll need to factor in your specific goals as an investor and the level of risk you are willing to tolerate.
Regulation
Part of what makes the UK attractive to stock traders is that it has a very well-regulated market, which reduces the risk of getting scammed and provides more security for new traders. The Financial Conduct Authority (FCA) maintains strict listing rules for issuers which mean you can be confident that what you are buying really exists and is being sold legitimately. There is lots of useful information available and you can report any problems you experience in order to help other traders.
Getting used to a new market always presents challenges but it also opens up new opportunities. If you’re willing to put in the work to find them, you could enjoy a good deal of success.
