Introduction to Investing Latest Stockmarket Information (UK) Back to JAMtoday JAMtomorrow JAMpot JAMhomepage Investing is not just for those with money. With a time and effort anyone can make money on the Stock Exchange.   Headline news of Stockmarket crashes and corrections frighten off the average citizen but any investors who keeps their nerve and stick it out for the longer term usually get their money back and more.   It is not generally known that, on average, money invested in stocks and shares grows by 6% more than any money deposited in a building society.   Funnily enough, you could be an investor without knowing it. The growing development of privatisations and even "windfall" shares from building societies and insurance companies mean that millions of people in the UK own shares. Pensions and mortgages are another form of share ownership.   Smart investors try to steers a path between risk-taking and maximising returns. It's not always easy but that can be part of the fascination of investing.   If you think about it, not investing is also a kind of risk. If you decide not to invest in stocks and shares then you are losing the potential growth for your earnings and investments. Back to Top   Financial Goals and Strategies Financial planning is really nothing more than a grand name for matching your investment goals with the money you have.   It's a good idea, whether you invest in stocks or shares or not, to sit down with a pen and paper and calculate how much income you have to save and possibly invest.   Once you have identified the amount of money available for investment, then you should identify what your aims and goals are:- money school fees, retirement, holiday home etc.   Then you could start to collect information on a range of investment schemes that would bring about these aims. Some of these are easier to find than others. For instance, school fees planning is available from financial companies who offer low risk products aimed at producing certain amounts of money at a particular time.   If you're looking to provider for your retirement, then clearly the aim is to maximise your pension contributions whilst also building up your cash funds.   For example, as you probably know, ISAs (formerly PEPs) and savings accounts are able to give you low risk but steady growth.   One less chancy form of investing is to diversify or spread any risk across a range of investment schemes. Clearly, it would be much safer to invest £1,000 in each of five companies rather than £5,000 in just one: the odds of all five companies doing badly at the same time are much lower than for one company.   But if you are after higher rewards, then you have to realise that there is always a risk associated with the return. For example, unit trusts promising high returns from capital growth do so by investing in volatile shares that have the potential for large gains. There is always, of course, the danger of equally large losses. Investments can go down as well as up.   If investments promise a high level of income, they may be doing this at the expense of eroding your original capital, the money you first invested. When it comes to bonds, higher returns come from lending to companies that are considered more risky.   The careful investor should aim to hold a combination of investments and shares, spread across industry sectors and markets.   You should look carefully at the charges, performance and the management of any investments being managed by yourself or by a broker.   Back to Top     Tips On Trading There are basically two ways of trading in stocks and share: you can engage a stockbroker to manage your investments with or without advice; or you can try to do it yourself via the Internet. Online share dealing has become very popular. First you need to have done the research mentioned earlier, namely why you are investing and how much you can afford. Then it is not all complicated.   Traditional stockbrokers communicating by telephone just cannot match the speed and ease of access by dealing online. You receive confirmation that your order has gone through, price and deal cost within seconds of making the transaction.   As with every commodity, online trading can vary in price so you'll need to compare prices by shopping around. There are many special bargains to be had as the competition for your business is keen. Take your time and pick the best deal for you.   Remember, unlike using a traditional broker, you can check everything before you deal. You are in control of the exact time you buy and at what price.   You'll find endless information about becoming a trader on the web, from hard facts- news and historical data - to comments and tips and various software for management a portfolio.  Back to Top    What is a share? A share means you have a 'share' a company. You are a part owner. That means you share in the firm's good and bad times. Shares usually entitle you to receive part of the company's profits, called dividends.   Where to buy? In the UK, investors almost always buy shares through the London Stock Exchange, the country's main stock market. In other parts of the world, it's possible to buy shares directly from a company or even over the counter at a bank. In the UK, buying direct is usually only an option with a privatisation or a stock market flotation, also known as a new issue or Initial Public Offering (IPO).  Back to Top   Income Shares offer you basically two benefits: growth and income, although not always both! Your income will come from dividends, and whether these increase each year depends on how well the company is doing. In bad years, companies may reduce their dividends or pay no dividends at all. Although for a large public company this would not be good publicity. Back to Top   Growth The growth of your capital or original investment will come from increases in the price of the shares. A company's share price goes up and down according to demand on the stock market. If a share is popular or rated highly, the price will rise. A company's share price can fall too. If a firm's prospects look particularly bad or it is in danger of going bankrupt, its price can collapse and investors risk losing their investments. Back to Top   What do I do now? You need to set up an account. You need to decide on an online broker. It is a good idea to make a thorough check that the service offers everything you want and that the charges are clear.   Cost is an important factor. Check how commission is charged if you deal in small amounts. Clearly no minimum charge will offer better value. If you're going to deal in large amounts then a charging system with a ceiling on commission will be better for you.   When you sign up for a service you will usually be required to deposit a minimum sum to be begin trading.. The account works just like a current account in a bank, i.e. any money that is not invested usually earns interest. Money from the shares you sell is paid into your account.  Back to Top   Where to invest? You will need a certain amount of knowledge about companies and markets when you start to buy and sell shares. The standard rule is: buy low and sell high.   What research? The Internet has opened up a whole new world of information and research to help the small investor make better and better decisions.  You can now access the latest news, company prices, announcements and broker research from the comfort of your own home.   Try this link for a start to find out what kind of information is at your fingertips on line: Latest Stockmarket Information (UK) It's a good idea to start with a 'fantasy portfolio', i.e. pretend to buy and sell shares to 'get a feel' for how it works and get to know the the markets and companies. Back to Top   Settlement Settlement takes place after you have clicked and bought or sold some shares.  Each transaction has to be paid for, or settled, within a specified period of time. Once the deal has been processed, the money is debited or credited to your account.  Shorter settlement times introduced in recent years mean that electronic share dealing has now become the norm, though it is still possible to hold shares in paper form.  All deals should be settled within five days although brokers can stretch this deadline in special circumstances.  Investors who switch from paper certificates to electronic trading can elect to keep their shares in what's called a nominee account. This means that a company is created to hold shares on behalf of the investor - it is the legal owner of the shares, not the investor who's just the beneficial owner. Where the investor's name once appeared on the register of shareholders, now it's the number of the nominee account. Latest Stockmarket Information (UK)  Back to Top     Back to JAMtoday JAMtomorrow JAMpot JAMhomepage