The main stock exchange is the London Stock Exchange (LSE). One of the most important UK indices is the FTSE 100, which represents 100 large companies listed in London. It is market-cap weighted, meaning larger companies have more influence on the index.
There are several useful UK indices:
A useful way to think about it:
FTSE 100 → large companies → often international revenues → generally more mature businesses
FTSE 250/AIM → smaller companies → potentially more growth → potentially greater volatility
Rather than saying these are “the best” investments, these are useful companies to study because they represent different industries.
| Company | Ticker | Broad sector | What to study |
|---|---|---|---|
| AstraZeneca | AZN | Healthcare | Drugs, pipeline, patents, R&D |
| Shell | SHEL | Energy | Oil/gas prices, cash flow, dividends |
| BP | BP. | Energy | Energy prices, capital spending, transition |
| HSBC | HSBA | Banking | Interest rates, credit quality, Asia exposure |
| Barclays | BARC | Banking | Net interest income, credit losses |
| BAE Systems | BA. | Defence | Government contracts, order book |
| Unilever | ULVR | Consumer goods | Brands, pricing power, margins |
| RELX | REL | Information/data | Recurring revenue, margins, growth |
| Diageo | DGE | Consumer | Brands, emerging markets, debt |
| National Grid | NG. | Utilities | Regulation, infrastructure, debt |
The LSE’s current FTSE 100 constituent list confirms companies such as AstraZeneca, BAE Systems, Barclays, BP and others among the index constituents.
Important: being a large or famous company does not automatically make its shares a good investment at today’s price.
This is one of the first things I would learn.
Imagine:
Excellent company + extremely expensive share = potentially poor investment.
And:
Average company + very cheap share = potentially interesting investment.
So don’t simply ask:
“Is this a good company?”
Ask:
“Is this a good company at this price?”
For example, suppose a company earns £1 billion per year.
If its market value is £5 billion, investors are paying 5× earnings.
If its market value is £50 billion, investors are paying 50× earnings.
The same company can therefore be attractive at one price and unattractive at another.
For each company, make a simple spreadsheet containing:
Then compare the company with its own history and competitors.
You don’t need 50 financial ratios when starting.
Start with these:
P/E = Share price ÷ earnings per share
It tells you roughly how much investors are paying for each £1 of annual earnings.
A P/E of 10 and a P/E of 40 represent very different valuations.
But don’t automatically conclude that 10 is cheap and 40 is expensive. A rapidly growing company may reasonably trade at a higher multiple.
If a £10 share pays £0.50 annual dividend:
Dividend yield = 5%
The UK market has historically had a relatively strong dividend culture, but dividends are not guaranteed.
Debt can become particularly important when interest rates are high or when a company’s profits decline.
This is particularly useful because ultimately a business needs to generate cash to reinvest, repay debt, buy back shares or pay dividends.
These help you understand how efficiently a company uses capital to generate returns.
Suppose you have £10,000.
You could put:
£10,000 → one company
If that company has a serious problem, your portfolio can suffer dramatically.
Alternatively:
£2,000 → Company A
£2,000 → Company B
£2,000 → Company C
£2,000 → Company D
£2,000 → Company E
And you could diversify further across countries and asset classes.
The FCA specifically recommends diversification because spreading investments across companies, sectors and geographical areas reduces dependence on any one investment.
You don’t necessarily need to analyse individual companies.
Instead, you can buy a fund that owns many companies.
For example, rather than trying to decide which 20 FTSE companies will perform best, an investor can use an index-tracking fund/ETF designed to follow an index.
This gives you diversification without having to pick individual winners.
You could learn about:
This is particularly worth studying if your goal is long-term investing rather than active stock picking.
I would not treat this as a recommendation to buy these securities. Instead, use it as a learning exercise.
Create a watchlist containing:
Then follow them for 6–12 months without buying.
For every company, record:
| Metric | Your research |
|---|---|
| Revenue | £___ |
| Profit | £___ |
| Free cash flow | £___ |
| Debt | £___ |
| P/E | ___ |
| Dividend yield | ___% |
| 5-year revenue growth | ___% |
| 5-year EPS growth | ___% |
| Main competitors | ___ |
| Biggest risk | ___ |
| Why could the company grow? | ___ |
| Current valuation | ___ |
After doing this for 10 companies, you’ll understand considerably more about investing.
A Stocks and Shares ISA is an important concept to learn.
The UK government currently says that an ISA can hold shares, funds, bonds and other qualifying investments, and that income and capital gains within an ISA are generally tax-free. The current annual ISA allowance is £20,000.
If you are not UK tax resident, don’t assume that ISA rules apply to you.
If you’re completely new, I’d do this:
Learn:
Learn:
Take 5 companies and calculate:
P/E
EV/EBITDA
Free-cash-flow yield
Dividend yield
Then compare them with competitors.
Pretend you have £10,000.
Choose 8–10 investments.
Don’t put real money in yet.
Track the portfolio for several months and write down why you chose each investment.
Start with an amount you can afford to lose and invest gradually rather than trying to predict the perfect entry point. The FCA also stresses having finances in order, understanding the investment, diversifying and taking a long-term view; it notes that investing over at least five years can help investors ride out short-term fluctuations.
There are actually two different skills:
Investing
“I want to own good businesses/funds for 5–20 years.”
Trading
“I want to profit from movements over days/weeks/months.”
For a beginner, don’t mix these up. If your objective is building long-term wealth, learning fundamental investing and diversification is a very different exercise from trying to predict next week’s share price.
If you tell me whether you are investing from India or are a UK resident, and approximately how much you want to invest per month (e.g. ₹10,000 / ₹50,000 / £500 / £1,000), I can next show you a beginner-friendly UK investing roadmap, including how to research FTSE 100 companies, what numbers to check, and an example portfolio structure without treating it as a personalised recommendation.
