Stocks and shares can serve various investment strategies and they’re easy to invest in. The huge range of shares available means you can aim to grow your capital, earn daily income through dividends or if possible then both. You can even buy and sell shares on popular UK markets such as the FTSE100, FTSE250, FTSE AIM 100 etc.
If you’re thinking about investing in stocks and shares, keep in mind that they run a lot more risk than so many other investments, such as cash savings, bonds and even funds that invest in shares as their value is based on the performance of a single company. Therefore, there’s a greater chance of both bigger gains and losses. However, by diversifying your portfolio, it can help protect it from the highs and lows of the market.
How stocks and shares work
Investments in UK stocks and shares can suit some strategies and goals.
When you buy a share, you accomplish part ownership of that company.
Holding shares gives you the right to vote on various issues facing the business. The everyday conduct of the company’s business is carried on by a board of directors, which is voted in by the shareholders.
Return from shares comes from the share price growth or from dividends – payments out of the company’s profits. No one can give you guarantee either profits or dividends and sometimes it happens that you could get back less than you invested in the beginning.
The two main kinds of share types – ordinary and preference. Most shares are ordinary ones. Preference shares may give holders importance when it comes to payment of a level of dividends and on liquidation of the company, nonetheless they don’t usually carry voting rights.
Preference shareholders generally receive fixed, regular dividend payments. However because the dividend is fixed, there is less potential for the share price to increase over the long term.
By holding shares from companies in various other industries and regions, you can create a diversified portfolio and aim to spread your risk, which may help you accomplish smoother returns.
If you’re not sure whether stocks and shares are right for you, in that case seek independent financial advice. All investments can fall as well as rise in value and you could get back less than you had invested in the beginning
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The value of your investments can fall as well as can rise depending on the market. Investing is not for everyone; if you are unsure please seek independent advice.