Buying Shares

BB78

I'm looking at buying some shares but really don't know anything about the stock market & have a couple of questions.

1) When people lose money in shares is that because the company has collapsed?

2) If I've got the money in savings although I'm not earning interest anymore as long as I sell the shares for more than I bought them I haven't lost anything?

3) If I have £100 of shares & the price drops & the shares are now only worth £50 I've lost out but is that only if I was to sell them? If I just kept hold of them & hope/wait for their worth to go back up I haven't lost anything?

4) If I have 100 shares in company A that are worth £1 each & they are bought by company B whose shares are worth £5 each are my shares then worth £5 each?

owner

No, yes, yes and no.

dzug1

BB78 wrote: »

I'm looking at buying some shares but really don't know anything about the stock market & have a couple of questions.

1) When people lose money in shares is that because the company has collapsed?

2) If I've got the money in savings although I'm not earning interest anymore as long as I sell the shares for more than I bought them I haven't lost anything?

3) If I have £100 of shares & the price drops & the shares are now only worth £50 I've lost out but is that only if I was to sell them? If I just kept hold of them & hope/wait for their worth to go back up I haven't lost anything?

4) If I have 100 shares in company A that are worth £1 each & they are bought by company B whose shares are worth £5 each are my shares then worth £5 each?

1. Not necessarily - it can just fall in value - rare for it to collapse completely
2. You normally get dividends in place of interest
3. You haven't actually lost anything until you sell them
4. No - they are worth whatever company B pays you for them.

BB78

dzug1 wrote: »

1. Not necessarily - it can just fall in value - rare for it to collapse completely
2. You normally get dividends in place of interest
3. You haven't actually lost anything until you sell them
4. No - they are worth whatever company B pays you for them.

So how do you make money from shares???

GreyPilgrim

BB78 wrote: »

So how do you make money from shares???

1) Buy Low

2) Sell High

3) Do not confuse first two rules.

elona

You invest in safe companies or unit trusts and leave them for years to grow.

If you use an ISA wrapper then you do not pay tax.

BB78

GreyPilgrim wrote: »

1) Buy Low

2) Sell High

3) Do not confuse first two rules.

How do you know what to buy??
With the way things are at the moment a lot of share prices are low; how do you know which ones are the most likely to go up?

If I know a big company is going to buy another company whose share price is currently low should I be buying now?

Brian_Bullocks

BB78 wrote: »

If I know a big company is going to buy another company whose share price is currently low should I be buying now?

How would you know that then? You have inside information?

BB78

Brian_Bullocks wrote: »

How would you know that then? You have inside information?

I've heard a strong rumour but I'm not connected with either company in anyway.

Brian_Bullocks

BB78 wrote: »

I've heard a strong rumour but I'm not connected with either company in anyway.

You've got to be careful with rumours, these are often put out to ramp up (or down) the price.

BB78

Isn't that always the risk in these things??
Reliable source but they don't know anything about shares either so we don't know if we are doing right by buying them before the takeover.