- Want to buy Tesco shares for exposure to the retail and food sector?
- Find out what to look for when deciding which online broker to use.
- Learn how to open an account and place an order.
When Jack Cohen founded Tesco (LON: TSCO) in 1919, he had no idea how big his business would become. It is the UK’s biggest supermarket chain and has been for decades.
Their focus has always been on providing value for money with good quality food, clothing, and household goods for a low price. It is this approach that has endeared them to their customers, so much so that 20 million households in the UK have at least one Tesco Loyalty card.
Buying shares in Tesco is easy when you follow the steps outlined below.
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Step 1: Open an account with a trading platform
Tesco shares are traded on the London Stock Exchange. Whichever broker you choose must have access to this stock exchange to buy their shares. (Those brokers listed on this page do.)
Here are some things to think about before deciding on a broker.
- What commission do they charge on trades?
- Which assets and markets do they offer access to?
- Can you buy fractional shares with them?
- How much do they charge for currency conversion?
- Do they have a good mobile app?
- Is there a demo account available to try out?
Step 2: Deposit funds in your trading account
To invest in Tesco shares, you'll need cleared funds in your account. You can transfer funds to your account via a debit card or bank transfer. Depending on the broker, credit cards might be accepted, too, but they aren’t supported as widely (because of the risk of fraud).
Step 3: Decide how much to invest in Tesco
A lot of things can go wrong in the market, which is why you shouldn't invest any more than you could afford to lose.
If your budget for investing is limited, you can invest regularly over time. Doing so means you can build your position while reducing your exposure to price volatility.
Step 4: Choose whether to invest in shares or an ETF
ETFs (Exchange Traded Funds) are a kind of diversified investment. Since what the fund invests in is managed, they are more suited to passive investors.
Each ETF consists of shares in a basket of companies. An ETF may be themed such that they only invest in companies in the consumer staples or food and beverage sectors.
Tesco shares are included in many ETFs including iShares Core MSCI EAFE ETF (IEFA), Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU), Schwab International Equity ETF (SCHF), and JPMorgan BetaBuilders Europe ETF (BBEU).
Step 5: Set up your order
A market order requires practically no configuration whatsoever if you have the funds to cover your trade. Once executed, the broker will buy shares at the next available market price, which can be a little higher or lower than what was quoted due to market activity.
With most trading platforms, you can create an order to be executed automatically whenever the share price hits a target. You can use them to buy or sell shares. For example, you could configure an order to buy shares the next time Tesco’s share price falls to a level that interests you.
Step 6: Buy
Submit your order to buy shares in Tesco.
What is going on within the supermarket industry, technological advances, changes in consumer behaviour, and employee satisfaction all impact Tesco’s profit. So, it is wise to keep an eye on the news to notice these things and see what effect they are having. Also, be sure to read the company’s announcements and results statements.
Pay particular attention to how their competitors are performing too. Tracking their main competitors Sainsburys (LON: SBRY), Morrisons, ASDA, ALDI, and Lidl is especially important considering changing consumer behaviour.
German discount grocers are prominent threats to Tesco’s performance. However, Tesco’s online business has been a strong performer, helped by their near-ubiquitous delivery network.
Disclaimer: We put our customer’s needs first. The views expressed in this article are those of the writer’s alone and do not constitute financial advice. Advertisers cannot influence editorial content. However, Finty and/or the writer may have a financial interest in the companies mentioned. Finty is committed to providing factual, honest, and accurate information that is compliant with governing laws and regulations. Do your own due diligence and seek professional advice before deciding to invest in one of the products mentioned. For more information, see Finty’s editorial guidelines and terms and conditions.