How to invest in shares: Your guide to joining the excitement of the stock market | This is Money

You are using an outdated browser. Please upgrade your browser or activate Google Chrome Frame to improve your experience. Years ago, if you wanted to invest in stocks and shares, you needed a personal invitation to meet a well-heeled gentleman in the City who would place trades on your behalf.

The internet has swept all of that away. Yet it isn't a complete gamble, and if you're careful, you can shift the odds nicely in your favour. A stock is a share in the ownership of a company.

Bourse et cotations, Actions et Indices en temps réel sur Euronext Paris, actualités financières

Importantly, it also entitles you to a share of the profits. This is typically paid in the form of dividends, which are payments made to shareholders, typically every quarter or twice a year. As companies grow, they often need to raise money to fund the next stage of their expansion. One way is to borrow it from the bank.

Another way is to issue shares in the business. The attraction of issuing shares is that the company doesn't have to pay interest or repay the debt at any point.

Shares Made Simple: A beginner's guide to the stock market: ydigatocop.web.fc2.com: Rodney Hobson: Books

You can also invest in smaller UK companies on indices such as the FTSE , or the alternative investment market AIM. Most ordinary investors now trade shares using an online stockbroker. Once you set up an account, you can buy or sell a stock in seconds although you should spend a lot longer than that doing your research.

Popular online stockbrokers include Alliance Trust, Charles Stanley, Hargreaves Lansdown , Interactive Investor , TD Direct, The Share Centre and Trustnet Direct. Banks such as Barclays and Halifax also offer sharedealing services. When comparing sites, check the fees carefully.

Many beginners start off hoping to make fast money from some hot stock market tip. If you flitter from stock to stock, quickly buying and selling in the hope of banking a quick profit, you will rack up a load of dealing charges, which could wipe out any profit you make.

To make money from stocks and shares, you have to be patient. You should invest over a minimum five-year term, preferably much longer, to allow you to overcome any short-term volatility. Investment legend Warren Buffett famously said that his favourite holding period is forever. You probably haven't got that much time on your hands, but the longer you give it, the better. Many novice investors underestimate the importance of dividends. The obvious risk is that you buy a company and its share price crashes, or worse, it goes out of business.

Or there could be a stock market crash, and all the shares you hold fall at the same time.

In the autumn of , for example, the FTSE almost halved in value in a matter of weeks. There are things you can do to minimise these risks, but you can't obliterate them altogether. Don't put all your eggs in one basket.

Instead you need to build a portfolio of different stocks, to minimise the damage if one fails.

Free Stock Market Game, Create Your Own Contest

You should also invest across different sectors. Don't start by buying three banking stocks, say, Barclays, HSBC Holdings and Lloyds Banking Group, as all your money will be exposed to the fortunes of a single sector. You might want to balance that by investing in FTSE listed oil majors such as BP and Royal Dutch Shell, pharmaceutical companies such as GlaxoSmithKlein and AstraZeneca, mining giants such as BHP Billiton and Rio Tinto, supermarkets Sainsbury's and Tesco, or utilities such as Centrica and National Grid.

Think twice before diving into, say, some small technology start-up you've read about. This is a high-risk activity, and you're far more likely to lose your money than invest in the next Amazon or Google.

Investing in stocks and shares is riskier than leaving your money in the bank, but the potential rewards are far greater.

Dismiss any notion that shares will help you get rich quick. The reverse is true: Beginner's guide to index tracker funds.

Beginner's guide to exchange traded funds. Beginner's guide to bonds.

Beginner's guide to investment trusts. How to invest in an IPO. Do you want to comment on this article? You need to be signed in for this feature. Beginner's guide to buying and selling shares Investing and pensions. Harvey Jones Updated on 16 January 1 Comment.

Terms of use Privacy policy Disclaimer.