Social investing is increasingly becoming the go-to investment strategy for a number of UK investors. Social investors are looking to invest in companies that contribute positively to society, rather than simply seeking out profits. Social investors are often drawn to the idea of ‘copy trading’ and ‘mirror trading’ as it enables them to invest in strategies that have already proven successful.
While there are no specific rules governing social investing, it does carry risks like any other kind of investment portfolio so it is important for potential social investors to understand these before jumping in.
In this guide on AtoZ Markets, we'll explain what social investing is all about and how you can get started with this exciting new style of finance.
Social Investing in the UK
Social investing is a way to invest in a portfolio of stocks, bonds and other assets that benefit the cause you believe in. It has been around for a long time, but has recently gained popularity due to the increasing number of people who want to align their investments with their values.
What is social investing?
Social investing is a way to invest in a company, without actually owning the company. It allows you to invest your money into projects that are socially responsible, or cause-related. In other words, it's a way for investors to put their money where their values are.
Copy Trading and Mirror Trading
Copy trading (sometimes called mirror trading) allows you to copy the trades of other investors without paying a commission. For example, if an investor makes a trade for 10 shares at £1 per share and you follow that same trade, you will also own 10 shares at £1 each but without having paid any commission. This is useful if your portfolio is small and requires little capital for each trade or if your investment strategy calls for low-risk investments that are unlikely to generate profits in the short term.
Copy trading on eToro is available both with real money accounts and virtual money accounts.
What are the benefits of social investing?
Social trading offers a number of benefits that can help you make better investment decisions. Here are just some of the top reasons to try social investing:
- Copy trades. If you find someone whose trades have been successful, you can copy their transactions, which means your investments will match theirs automatically and immediately. You won't have to spend time researching new stocks or worry about making mistakes during the process. Social trading also makes it easy for investors to diversify their portfolios by bringing more funds into play at once, which increases their chances of success and reduces risks. In addition, copying trades allows traders who are new on the scene or who don't have much capital yet build up their portfolios quickly without having to commit large amounts upfront or spending too much time researching individual companies' products--which could be risky if done wrong.
- Learn from other traders' experiences firsthand by reading about how they made decisions about specific stocks (and why) before making your own decisions based off of this information
Before jumping into Social Trading, want to try Forex trading of your own? We recommend the following 3 forex brokers.
Understanding risk with social investing
When you invest in a company, you are putting money at risk in exchange for the possibility of gaining additional value. When an investor purchases stock from a company, they are investing that money with the hope that they will be rewarded by dividends and/or price appreciation. This means that there is always some degree of risk associated with every investment, the higher the potential return on an investment, the higher its associated risk level. It’s important to understand this relationship between risk and reward because social investors are often looking for projects with high social impact but low financial risk.
However, when we examine traditional investments like stocks or bonds (which you can read more about here), we see that there are many different types of securities available to consumers who want exposure to certain sectors or industries without having direct ownership over specific companies within those sectors or industries:
- Equity: A security representing ownership in a company which is also known as common stock. An equity stake allows investors voting rights on corporate issues such as changes in management policies and mergers & acquisitions activities.
- Debt: A security representing any debt instrument issued by a corporation or government entity (such as municipal bonds). Bonds usually carry an interest rate that varies depending on many factors including prevailing market conditions at issuance time.
How to start with Social Investing
- Get a trading account.
- Choose a broker.
- Choose a social trading platform.
- Choose an asset class (e.g., shares, bonds).
- Choose a strategy to invest in that asset class with (e.g., long-only investing or short selling).
- Find the trader whose strategy you like best and invest with them on the social trading platform through their profile page or by subscribing directly to their feed via email/social media feeds etc.
List of Best Social Trading Platforms in the UK
eToro, a leading social trading platform, offers multiple opportunities for investors to engage with the financial markets. The company allows you to copy or mirror the trades of other eToro traders who have been successful in their investments and strategies. In addition, users can choose from an extensive range of asset classes, instruments and strategies to build portfolios that are tailored to their needs and risk tolerance. eToro UK also offers Cryptocurrencies. If you are a Crypto lover, read our Best Crypto Exchanges in the UK 2023
Pepperstone is a UK based CFD broker that offers social trading and copy trading. They also have a complete trading platform with a variety of trading instruments. Pepperstone has a strong global presence with offices in Australia, Europe and the US.
Pepperstone was founded in 2004 by Ray Friel as an online Forex market maker, but has since expanded into other types of trading products like metals, commodities, stocks and options on stock indices (ETFs). The company headquarters are located in Sydney where you can find its Australian office as well as its operations center for Asia-Pacific region (Hong Kong).
- XTB is a social trading platform that allows you to copy trades of other investors.
- It's a regulated broker.
- XTB offers a wide range of assets: Stocks, bonds, ETFs and cryptocurrencies are all available through the platform.
- The platform has a free trading account for basic activities (you only pay if you want to trade with more than €100). You can also test out the demo account before opening your own trading account if you wish to try it out first.
AvaTrade is a social trading platform that offers you access to the world of financial markets. A regulated broker, AvaTrade has been providing investors with the opportunity to trade via copy trading, mirror trading and social trading since 2013.
With no minimum deposit needed, you can start investing right away on AvaTrade’s platform. The broker currently offers CFDs on more than 150 assets across most global markets including equities (stocks), forex (foreign exchange), commodities and indices, so there are plenty of opportunities for you to increase your investment portfolio without having to make high-risk investments yourself or go through any other barriers that may inhibit your progress as an investor.
Plus500 is a CFD and forex trading platform that allows traders to copy the trades of experienced traders on their social trading platform. It is regulated by the FCA, which means that Plus500 is trusted by millions of people around the world.
Read Also: Best CFD Brokers in the UK 2023
Plus500 has a wide range of different assets available for you to trade with, including stocks, commodities and cryptocurrencies like Bitcoin or Ethereum. Traders can also use this platform to invest in traditional currencies such as dollars or euros while they're queued up at Starbucks waiting for their latte!
Plus500 has one of the lowest minimum deposit requirements of any online broker in the industry: just $250 will get you started.
We hope that you have found the information in this guide useful. There are many different ways to invest in social trading, and it is important for you to choose one based on your personal preferences. Whether you want to start off with copying other traders or mirroring their trades, there are plenty of options available today. If you want a more hands-off approach where all decisions are made automatically for you then look no further than Copy Trading & Mirror Trading platforms such as eToro or Pepperstone who provide these services through their platforms without any additional fees.
Top Social Trading Platforms in the UK 2023
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