Buying individual shares means owning tiny slices of actual companies.
When you buy a share of Tesco, you become a microscopic part-owner of Tesco. No boardroom perks, no secret handshake, but still ownership.
If index funds and ETFs are like buying a readymade basket of companies, individual shares are you picking fruit one by one.
You get more control, more flavour, and more chances to grab something great. You also get more chances to pick the bruised fruit by mistake.
Let’s walk through it properly.
Quick reminder
I’m not a financial adviser, and this isn’t advice. Think of this page as friendly homework notes, not a personalised investment plan.
How individual shares work
When you buy a share, you’re buying a piece of a company’s value and its future potential.
If the company does well, the share price may rise. If it does badly, it may fall. There are no guarantees.
You make money in two ways:
- Share price growth: The value of your shares increases. Buy at £5, sell at £7, pocket the difference.
- Dividends: Some companies pay out a share of their profits. If you own the share on the “ex-dividend date,” you get a payment, typically every quarter, twice a year or once a year.
Why people pick individual shares
Individual shares can look tempting because they offer more control and potentially higher returns.
They also give you a stronger sense of connection, because you know exactly what you own.
Common reasons people go this route:
- You can back companies you believe in: If you genuinely think a business will grow, you can put your money behind it.
- You can focus on sectors you understand: Some people feel comfortable analysing supermarkets, tech firms or banks because they follow those industries closely.
- You may get higher returns: A few shares outperform the market in big ways. Spotting one early can feel like winning the financial lottery.
The risks you need to know about
This is where you need to slow down and breathe.
- Your risk is concentrated: If you buy an index fund, you might own 1,500 companies at once. If one fails, someone else picks up the slack. If you buy one company and it fails, that’s it. Your investment can drop by huge amounts, sometimes quickly.
- It takes time to research: You’ll need to look at annual reports, earnings updates, debt levels and business trends. It doesn’t need a PhD, but it needs more effort than buying a broad fund.
- Share prices jump around a lot: Individual companies can fall 10% on a bad trading update or jump 15% on good news. This can feel exciting or stressful, depending on your tolerance.
How to buy individual shares in a stocks and shares ISA
The UK makes this relatively easy. Inside your ISA, you don’t pay tax on gains or dividends, so it’s a tidy way to hold shares.
Here’s the basic workflow:
- Pick a platform: Examples include Vanguard, Hargreaves Lansdown, Fidelity, Trading 212, Freetrade. Some charge a flat fee, some a % fee, some charge for each trade.
- Search for the company: You can usually find shares by their name (e.g. “AstraZeneca”) or ticker symbol (AZN).
- Choose how many shares you want: Higher-priced shares might offer “fractional shares,” letting you buy a slice instead of a whole unit.
- Place an order: A “market order” buys at the current price. A “limit order” buys only if the price drops to a level you choose.
- Hold or adjust your position: Some people buy and hold. Others trade more often. Long-term holding generally involves less stress and fewer poor decisions.
What a realistic strategy might look like
You don’t need to build a full portfolio from individual shares. A simple approach is to use them as seasoning rather than the whole meal.
For example:
- 80% in broad index funds
- 20% split across 4 to 6 individual companies you feel confident about
This gives you some excitement without putting all your eggs in one risky basket.
Examples of individual shares people analyse
You’ll often see UK investors looking at:
- Diageo for global drinks sales
- AstraZeneca for pharmaceutical growth
- HSBC or Lloyds for the banking sector
- Unilever for consumer goods
- BP or Shell for energy
These aren’t recommendations, just common names people research because they’re large, established and well-known.
Common mistakes to avoid
- Chasing hype: If everyone online says a stock “can only go up,” it’s usually already too late.
- Ignoring diversification: Three tech companies aren’t “diversified.” They’re three flavours of the same risk.
- Checking the price every hour: It won’t help you make better decisions. It’ll just raise your heart rate.
- Skipping research: Buying a share because you like the product isn’t the same as understanding the business.
Are individual shares right for you?
Individual shares can work for people who:
- Enjoy researching businesses
- Can handle price swings
- Don’t mind spending time reading updates
- Want to build a more personalised portfolio
They’re less suitable if:
- You prefer steadier returns
- You don’t want to constantly think about the market
- You’re happier with broader, simpler investments
There’s no shame in sticking with funds. In fact, most people do exactly that.
Nearly done! Next up are REITs.
