Buying investments can seem daunting if you haven’t done it before. Follow our step-by-step guide.
Do you need help?
Have you decided what type of investment you want? Are you reasonably sure of what investment or product features you’re looking for?
If not, consider going to a financial adviser. The adviser will help you with these choices and with the buying process.
Checklist for buying investments
Avoid unsolicited investment offers.
If you’re considering an investment offer, consider seeking financial advice.
Are you intending to buy individual shares? You need to use a stockbroker, the cheapest do tend to be online although the cheapest may not necessarily mean better.
You can find out about different types of service and search for a provider by:
- Visiting The Personal Investment Management and Financial Advice Association (PIMFA) website
- Using the Investors Chronicle stockbroker comparison tool and table
- Are you looking at investment funds? Use the Investment Association website to find out more about the types of funds available and where to go for more information. To compare these and other types of funds in more detail, you could look at specialist sites, such as Trustnet and Morningstar.
- Decide how you want to buy – for example, going direct to the provider, through a fund supermarket or through a broker. Usually you’ll buy online or by phone. Follow the link below to check out your options.
- Before you buy, consult the Financial Services Register run by the Financial Conduct Authority (FCA) to check the firm you decide to buy through is authorised to provide the types of investment or service that you’re interested in. If a firm isn’t authorised, report it to the FCA or police and do not do business with it.
- Read the keyfacts or key investor information document for the investment before you buy. These documents set out important information that the provider must tell you (these are not required for specific single/direct holdings of stocks and shares for example, not shares held in a fund or unit trust). If there is anything you do not understand, contact the provider for further details. If you’re still unsure, you might want to consult a financial adviser.
- Check what fees and charges you will have to pay. Charges for the same product might vary according to how you buy or which broker you choose. So compare the cost of buying through different routes and firms.
- Check how you will be able to manage and keep track of your investment. For example, will you be sent regular statements? Will you have an online account? What’s the procedure for selling your investment later? How will you and the provider normally communicate – by email, online, phone, post?
- Be suspicious if an investment seems too good to be true. Unless you can check what you’re being told against an independent, trusted source, report the firm selling it to the FCA and walk away.
- Don’t be swayed by offers that require you to make up your mind today. It’s better to take your time to consider a deal properly even if it does cost a little more rather than be rushed into an expensive mistake or a scam.
- If the firm you’re dealing with puts pressure on you in any way, don’t do business with them. They might want you to take a quick decision without time to consider whether the product is right for you. Or they might pressure you to buy a different type of product to the one you wanted, or invest more than you intended. Instead, use a different firm that you’ve checked is authorised by the FCA. Or, consider seeking financial advice.
- Once you have decided to buy, follow the firm’s instructions for investing. You will probably have to provide evidence of your identity and address – even if you have bought online or by phone, you might need to do this by post or in person at a local branch.
- Carefully read the documents you get confirming your investment. Are the details correct? Check you have a cooling-off period. If you do have a cooling-off period, this is a chance to reconsider your investment and change your mind if you want to.
This article is provided by the Money Advice Service.
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