There are number of ways you can buy investments. Read on for an overview of your main options. Before making any investment decisions, you need to be sure that the products you plan to buy match your goals, timeframes and appetite for risk.
Before you buy
Avoid unsolicited investment offers.
Before investing check the FCA register and warning list.
If you’re considering an investment offer, seek impartial advice.
Complete a money fact find questionnaire then use it to draw up an investment plan outlining the types of products you need.
If you’ve not yet done this, follow the links below to get started.
Where can you buy investment products?
This table shows the most popular ways to buy investments.
You can find more detail about each below.
||Where to buy
Stocks & Shares
Shares, fixed interest securities
(Most can be wrapped into an ISA or pension)
- Via an online stock broking service or platform
- Through a financial adviser
- Through a bank or building society
- Use a private client stockbroker
Unit Trusts & OEICs
(Can be wrapped into an ISA or pension)
- Buy via a discount broker
- Buy via an online stock broking service, fund supermarket or other platform
- Buy direct from the fund managers
- Through a financial adviser, bank or building society
Life insurance linked investment products
- Direct from a life insurance company
- Through a financial adviser, bank or building society
- If you are looking for an annuity read our guide How to shop around for an annuity
Using online stock broking services, fund supermarkets and other online platforms
If you are buying shares and similar investments direct, you need to use a stock broking service.
A few firms still have branches and most high street banks have a share dealing service.
Some broking firms offer a phone-based service.
But the most common way to buy and sell shares is through an online service.
When you use a broking service you can do your own research and decide what’s right for you or use their advice service, if they have one.
Online services where you can view, buy and sell stocks, shares and investment funds, all in one place, are increasingly popular.
Most also let you invest through ISAs and pensions plans if you want to.
Nowadays, these services are collectively known as ‘platforms’.
Although this term might be new to you, you might have used platforms in the past, for example, if you have bought investment funds through a fund supermarket.
Typically this is a cheaper way to invest in funds than going direct to the fund provider.
Be aware of fees when investing through a platform.
There is usually an annual charge. In the past, this might have been collected through the fund’s annual management charge.
But since April 2014, a separate fee must be paid direct to the platform provider for new investments.
You might also be charged if you transfer your shares, funds or other investments from one platform to another.
This is on top of the normal dealing costs when you buy and sell shares and the charges that go to fund managers.
These can all add up, so make sure you understand the total charge and are happy that it’s worth paying.
Using a discount broker
Discount brokers often offer a cheaper way to invest in managed funds than going direct because they’re able to rebate some of the fees you would have paid to the fund management company.
You can compare costs easily online.
Discount brokers typically let you invest through an online platform (fund supermarket) but some also offer a phone-based service.
Using a financial adviser
If you have complex needs or a large sum to invest, consider professional financial advice.
A financial adviser must make sure they understand your financial situation, goals and risk attitude.
They can only recommend products that are suitable for you.
They can make the investments for you if you want them to, and help you manage them in the future.
Check all the fees – ask what the adviser will charge you and your options for how you will pay.
The adviser might recommend that you hold your investments through a platform, in which case you will pay for this separately from the fee for advice.
Using a bank or building society
A high street bank or building society isn’t always the best place to buy an investment product.
A high street bank or building society can be a convenient place to buy investments.
But be aware that:
- Generally bank and building society staff do not give investment advice – they sell to you based on ‘information’ which means they have not checked the suitability of the product for your needs. Some banks and building societies no longer sell investments through their branches, only through their websites. Typically banks and building societies are more expensive than buying through an online platform.
- Financial advisers within banks and building societies are usually tied to selling the firm’s own products or a limited number of products. However, increasingly, banks and building societies have stopped giving advice unless you have very large sums to invest.
Using a traditional stock broker
If you’re looking to invest in stocks and shares or investment trusts, you’ll need to use a share dealing service.
You can choose services that let you deal through branches, by phone, or through online platforms that you access by computer or your mobile.
Stockbrokers provide three main services:
- ‘Execution only’ service – they just buy and sell the investments following your instructions
- ‘Advice service’ – they carry out a fact find and make recommendations of what you should buy/sell based on your goals and needs
- ‘Discretionary service’ – you give them permission to buy and sell for you broadly in line with an agreed investment plan (follows on from advice service)
Fees – charges vary for different services. Always ask for a detailed explanation of costs from the start including charges and commissions that will be deducted from your investment returns.
Buying direct from fund managers
You’ll find fund management companies’ details and their range of funds listed online or in the press.
For example, see The Investment Association’s Find a Fund Manager Directory.
However, buying direct isn’t necessarily the cheapest method – be sure to check what fees you’ll be paying and compare the cost for buying through a discount broker.
If you choose to buy direct from a fund manager you will not get advice.
Buying direct from a life insurance company
You can buy life insurance policies, endowment policies, pension products and life insurance linked investment bonds directly from an insurance company.
However, buying direct isn’t necessarily cheaper. Check what you’ll be paying and compare the cost with buying through a financial adviser.
Use the Financial Conduct Authority firm check service
Whether buying direct or using an adviser, make sure any firm you are dealing with is authorised by the Financial Conduct Authority (FCA) by checking its entry on the FCA Registeropens in new window.
This means you have rights and might be entitled to compensation if things go wrong.
Before you invest