How to Buy Royal Mail Shares UK

If you’re based in the UK and wish to invest in Royal Mail, you’ll need to find the UK share dealing site that gives you access to the London Stock Exchange, open an account, and deposit funds – and then decide how much you wish to invest in the stock. The shares will then be added to your portfolio in a matter of seconds.

In this guide, we show you the steps required to invest in Royal Mail shares. We also explore some of the popular UK stockbrokers to do this with.

Step 1: Review a UK Stock Broker

Your first port of call will be to find a UK stock broker that meets your needs. There are hundreds of platforms that allow you to purchase Royal Mail shares, so it is important to review brokers based on the fees provides, tools available and other asset classes that allow you to diversify your trades.

Below, we have listed three popular UK share dealing platforms that can help you in your investment process.

1. Plus500

Plus500 is an online trading platform that lists more than 2,000 stock CFDs – including that of Royal Mail. The platform also allows users to trade stock CFDs.

For example, you will be able to apply leverage on your stock CFD trades of up to 1:5 (and more on other asset classes), meaning that a £200 balance would permit a £1,000 order on Royal Mail shares.

You will also be able to choose from both buy/sell orders on Royal Mail stock CFDs at Plus500. This means that you will be speculating on whether the value of the stock CFDs will go up or down. Additionally, Plus500 offers much tighter spreads, as the underlying stock does not actually exist. You won’t need to pay any commissions either, so it’s only the spread that you need to take into account.

If you are interested in a short-term trading strategy, Plus500 allows users to open an account in minutes, and make a minimum deposit of £100. In terms of safety, Plus500UK Ltd is authorized & regulated by the FCA (#509909). The broker’s parent company is also listed on the London Stock Exchange, so safety shouldn’t be a concern.

72% of retail investors lose money trading CFDs at this site

2. IG

IG is an established UK broker that was first launched n 1974. The platform offers an array of financial instruments – including traditional share dealing services, CFDs, and spread betting. In the case of purchasing Royal Mail shares, you will either pay £3 or £8 per trade.

To get the lower price, you will need to have bought or sold three stocks in the prior month. Even at £8 per trade, this is still really competitive. You will also benefit from a stock broker that has been in business for more than 46 years.

Naturally, IG is heavily regulated, including a license with the FCA. If you are looking to create a diversified portfolio of shares, IG hosts thousands of companies. This includes both UK and international stocks. In terms of getting started, IG requires a minimum deposit of £250. Cash can be added to your account via a debit/credit card or bank account.

Your capital is at risk.

Step 2 : Open an Account.

Once you have done a bit of homework and decided which UK stock broker you wish to use, you will then need to open an account. This rarely takes more than a few minutes, and simply requires some personal information from you. If you’re yet to register at an online investment site, below you will find a handy step-by-step walkthrough.

After you have chosen a suitable brokerage that meets your requirements, you can begin trading following the instructions below:

Begin with providing your personal information. This may include:

• Full Name
• Home Address
• Date of Birth
• National Insurance Number
• Email Address
• Phone Number

Usrs will also be asked to confirm their identity, as is the case when investing with FCA-regulated brokers. This is to prevent fraudulent account applications. The two documents that you will need to upload are:

• Passport or Driver’s License
• Recent Utility Bill or Bank Account Statement

Your account should be verified in a couple of minutes.

When it comes to supported payment methods, many brokerages offer the following supported options:

• Debit Cards
• Credit Cards
• Paypal
• Skrill
• Neteller
• UK Bank Transfer

Your deposit will be credited instantly – unless you transfer funds with a UK bank account.

Step 3: Purchase Royal Mail Shares

As soon as you have funded your newly created brokerage account, you may begin the investment process. The easiest way to get to the respective trading page is to enter ‘ROYAL MAIL’ into the search box at the top of the screen on your trading platform.

You will then be presented with an order box, and need to enter the amount you wish to put into the trade to confirm the transaction.

Overview of Royal Mail Shares

Royal Mail traces its routes back to the year 1516 – where until 2013, it was the UK’s nationalized postage company. With that said, the government made the decision in 2013 to privatize the firm, meaning that it is now listed as a PLC on the London Stock Exchange. The Initial Public Offering (IPO) – which was made available to both retail and institutional investors, priced Royal Mail at 330p per share.

Those that managed to get a look in were rewarded within the first day of trading, with the stocks increasing to 455p. This represents an increase of 36% in less than 24 hours. Although the stocks then traded sideways for the following four years, Royal Mail hit all-time highs in 2018 at just over 631p per share.

Had you invested during its IPO and sold at its peak, you would be looking at gains of over 90%. However, since its 2018 peak, Royal Mail has seen its shares move in the wrong direction. At the time of writing in mid-2020, the shares are trading at just 177p. This is about half of what the firm’s shares traded at during its 2013 IPO, which is somewhat concerning for investors.

Features of Royal Mail

If you are looking to invest in the stock, here are a few features to know about Royal Mail before making your investment.

Shares Can be Purchased at a Discount

The obvious starting point is that of its current share price range. At 177p, this represents a significant discount to what early investors paid during the 2013 IPO.

Crucially, the UK postage network is controlled by Royal Mail, which is what makes it such a popular company. While the stock price is 50% lesser since its IPO release, users will want to make sure to conduct a proper analysis of the financials and data before opening a trade.

Innovation is Key

There is no getting away from the fact that the number of traditional letters being posted – not just in the UK but globally, is on a steep decline. In full recognition of this, Royal Mail has since looked to innovate to increase its tightening margins. For example,  the postage company is now part of a Click & Collect network that is available in over 10,000 UK post offices.

The firm has also launched a Sunday service in conjunction with Parcelforce, which it hopes will give it the edge in the premium postage sector. Royal Mail has also dedicated resources to its IT network, with the view of streamlining some of its outdated processes.

Cost-Cutting is Freeing-Up Capital

With its core letter business on the decline, management at Royal Mail is taking an aggressive approach to free up some much-needed capital. At the forefront of this is the announcement of 1,000 job cuts. It is believed that this will result in annual savings of over £50 million.

The Verdict

Sentiment around Royal Mail shares is somewhat bearish at the moment – which is fully evident in its current stock price of 177p. The overarching concern for stockholders is that Royal Mail is operating in a declining industry – with digital alternatives being favoured over traditional letters.

The firm is also heavily restricted in what it can charge for its core services – as per stringent UK government regulations. On the flip side, Royal Mail shares are available at a discounted rate. However, you should conduct your own research and decide on whether or not to invest in this asset for the future.

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