Beginners guide to investing in the stock market uk

If you are dipping your toe in the market for the first time you need to tread carefully, and be aware of the risks. Here is our guide on what to consider. Tales of stellar gains from the stock market may make you wonder why you are sticking to cash accounts, particularly with interest rates in the doldrums. Yet while you want to make the most of your money, knowing where to start as a novice investor is daunting.

The first thing to ask yourself is how you would feel if you lost money — if you are prepared that your investment may fall in value, the stock market may be a good option for you to consider.

However, if the very thought gives you sleepless nights, stick to the safety of cash savings. Secondly, you must be willing to leave your investment alone for the medium term, of preferably five or more years. You could invest in individual shares in companies you know and understand, but this carries a high risk. You are buying a stake in a company, which may pay a regular income to its investors in the form of a dividend.

These payments are typically made twice a year.

Trade Like Chuck

You can withdraw the cash or use this to buy more shares. However, ploughing returns from dividends can dramatically bump up returns over the years. Alternatively, investment funds avoid putting all your eggs in one basket. Funds such as unit trusts and open-ended investment companies OEICS spread risk among typically companies.

A beginners guide to investing on the stock market | Money | The Guardian

Equity income funds can make a good first pick for those looking to invest in a spread of companies with healthy dividends. They typically invest in a wide range of FTSE companies. They are run by professional fund managers, who buy and sell individual stocks within the fund.

This way, you avoid the worry of making these decisions yourself. There are plenty of complicated investments that require a greater depth of investment knowledge. For example, spread betting and day trading — but these are best left to the professionals. This depends on your savings elsewhere. As a general rule, you want to hold a spread of investments. You can always build this up over time. Without the help of a crystal ball, it can be impossible to know when to invest.

Which is best for you depends on circumstances, and your attitude to risk. If you are nervous about timing the market, regular savings is a sensible option. By drip-feeding money in, you can reduce the risk of market timing — if the market falls, your money will simply buy more shares at a cheaper price the following month.

This should even out returns over your investment timeframe. There are plenty of DIY investment platforms that work similarly to an online supermarket, offering a range of investments from different companies. You can buy these are keep them in one place, often at a reduced cost.

There are tips and tools for how to build a portfolio, with examples depending on your goals and attitude to risk.

Check and compare dealing fees, charges, and any other costs. Buying funds, trusts, or shares involve paying fees that can eat up a sizeable chunk of returns. But these vary widely depending on the investment and the size of your portfolio.

Here are some of the most common you will come across:. Annual management charge AMC: A yearly charge for a fund, typically around 0.

However, if you are buying through a platform this is often reduced. Also, if you choose a basic tracker fund following the FTSE , say, you will pay much lower charges. This is the yearly cost of administration for the fund on an investment platform. Charges range upwards from around 0. This can be a useful comparison tool, as it includes various charges.

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

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BEGINNER'S GUIDE TO INVESTING: Harriet Meyer 27 Aug The golden rules The first thing to ask yourself is how you would feel if you lost money — if you are prepared that your investment may fall in value, the stock market may be a good option for you to consider. How much to invest This depends on your savings elsewhere. Lump sum or regular savings Without the help of a crystal ball, it can be impossible to know when to invest.

Consider your costs Buying funds, trusts, or shares involve paying fees that can eat up a sizeable chunk of returns. Here are some of the most common you will come across: What is Money Means?

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How to invest in the stock market: a beginner's guide | Money Observer

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