Stocks and Shares

Sol00

Hi.

I've been thinking for some time about investing money into shares but have no idea how and where to start. Could someone give me some advice on this? I've checked online, but it may as well be in a foreign language lol

Crabman

Hi Sol00, there's an article on the subject of buying, selling and holding shares on the main site:

http://www.moneysavingexpert.com/savings/cheap-online-sharedealing

Aegis

Sol00 wrote: »

Hi.

I've been thinking for some time about investing money into shares but have no idea how and where to start. Could someone give me some advice on this? I've checked online, but it may as well be in a foreign language lol

Do you have your heart set on shares, or would you consider another investment product that offered growth with a lower risk level?

I ask because stocks and shares as a term covers a lot of asset-backed investments, including gilts, bonds, shares, OEICs, investment trusts, unit trusts, ETFs, etc. Essentially there's a lot to choose from out there!

Sol00

Aegis wrote: »

Do you have your heart set on shares, or would you consider another investment product that offered growth with a lower risk level?

I ask because stocks and shares as a term covers a lot of asset-backed investments, including gilts, bonds, shares, OEICs, investment trusts, unit trusts, ETFs, etc. Essentially there's a lot to choose from out there!

Yes I'd consider anything that would help my money grow. Like you've pointed out above, it's really confusing.

Aegis

Sol00 wrote: »

Yes I'd consider anything that would help my money grow. Like you've pointed out above, it's really confusing.

Ok, I'll start you out with definitions of what I said above so that you know roughly what you're looking at:

Gilts: Essentially buying outstanding loans to the government. They have a redemption price and an interest rate, and are pretty much guaranteed in terms of final value and payments.

Bonds: Similar to gilts, but to companies instead of the government. Because these are companies the risk level ranges from a little higher than gilts for the large well-established companies to quite significantly higher for smaller ones.

Shares: Direct ownership of part of the company. Shares give you voting rights at AGMs and EGMs, though if you hold them through a nominee account you'll usually let them sort all that out for you. Shares sometimes give dividends, though this is not guaranteed, and the capital value is very much a variable, which sets these apart from gilts and bonds, whose market values tend to only range between limited values.

OEICs/Unit Trusts: Essentially this is investing in a company or a fund which in turn invests in a number of other assets described by their strategy outline. Your money is pooled with other investors' and the manager of the fund will then select what to invest in with the entire holding. This essentially means that with a small holding an investor gets exposure to a diverse range of assets that they would otherwise be hard-pressed to replicate in a small portfolio. The disadvantage is that a management charge is levied on investors, so you won't realise the full benefits of your holding. However, as you also get the service of a (usually experienced) dedicated fund manager, you also get protection against changed in market conditions compared to an unmanaged portfolio.

Investment trusts: Similar to the above, but these are traded on the stock market and are therefore shown in real time rather than on the daily pricing basis that unit trusts and OEICs work on. These are closed investments, meaning that the price is based on trader demand rather than necessarily on the value of the underlying assets. Essentially you're buying shares in a company which buys shares in companies, if that makes any sense!

ETF: Exchange Traded Funds. I'm not too experienced with these, but from what I've seen they're quite a good way to track an index or a commodity in a similar way to buying an investment trust.


All of these have their pros and cons, and you can find a lot more information on them than what I've provided here, but this ought to help you understand some of what you read here!

Sol00

Thanks very much! I'll look these up on the net.