The chances are you’ve heard of the London Stock Exchange in some form or another, especially if you are based in Europe, where this is the largest exchange there is. It is also one of the 10 biggest in the world.
The London Stock Exchange is often abbreviated to LSE, and it can represent an opportunity for some traders and investors – but only if you understand a little about the industry before getting started.
The LSE has listed over 2,000 different companies as issuers of debt or equity securities. It is estimated that the market cap is over £5.2bn when you take into account all of the assets.
Knowing how to buy shares can seem difficult but the sooner you start to learn about the stock exchange, the sooner you can begin investing.
How does the LSE work?
The London Stock Exchange allows securities to be traded and has multiple different divisions in which it operates, including the Alternative Investment Market (AIM), which is for quick-growing and forward-thinking companies, and the Main Market Standard Segment, for more established and large businesses that may be seen as safer or more secure bets.
Some of the biggest companies traded on the LSE include Toyota Motor Corp and Unilever.
The LSE has been operating for an extremely long time and can even trace its roots back to the 17th century. Of course, in the modern age, it is far easier to analyse the exchange, read the latest news, and work out a strategy to invest.
We live in the age where people can invest in everything from whisky casks to huge global companies, all without leaving the house. The LSE is no exception, and providing you work with the right brokers, you may be able to invest in the exchange.
How to invest in the London Stock Exchange
Investors have many different options, and even international investors may be able to trade on the London Stock Exchange.
The easiest method is to open an account with a broker. Accounts are available in different formats, and some of them allow you to execute (buy and sell), while others might just provide advice on the industry. Always read up about the account you are opening.
Internationally, there are also companies that allow you to trade LSE stocks, but they use global depository receipts. Be warned that this might require a pretty sizable investment to get started.
A lot of people know all about stock markets in America but they might be overlooking the opportunity to delve into one of the most diverse securities exchanges out there. The LSE doesn’t just focus on UK companies; it has a huge number of different companies, from startups to very hugely popular and exceptional companies.
International brokers and ‘ADRs’ are also listed on US brokerages and exchanges, so you can use dollars if you are based in the States.
A quick, step-by-step guide to investing in the London Stock Exchange can be found below:
- Select a broker that allows you to invest in the Stock Exchange directly or even using ETFs to track the industry.
- Open an account. This will involve providing plenty of details, including your name and address and possibly even tax responsibilities.
- Add funds to your account. This means you will have some finances in your account that you can begin to use to buy securities.
- Buy and sell. Whether buying ETFs or directly buying shares, the best brokers will give you some good options and enable you to easily find opportunities to invest.
Tips for investing
Time to invest in the London Stock Exchange? Here are a few tips to try and help you to get the best results.
- Consider a financial adviser. This is a great way to get the sort of advice you need before taking the plunge on any investment, and good advisers know their stuff.
- Take advantage of any promotions and sign-up bonuses.
- Do your research. When you are investing in a company, it is crucial to understand what direction they are headed in, and the potential for their securities to go up or down.
- And always remember, the value of your investment can go down as well as up, and you can get back less than you originally invested.
