There are four main ways to invest – cash, property, bonds and shares. While shares are often the riskiest choice of the four, they also happen to typically offer the highest rewards.
The stock market seems like a daunting place to most of the uninitiated but with plenty of research and a good basic understanding of the way it works, you could find it’s much easier to negotiate than you assumed. It’s worth bearing in mind, however, that to play the stock market, you need to be willing and able to invest your time as well as your money. Precisely one of the reasons that so many retirees choose to wait until they’ve left work or cut their hours before investing
Resources for starting out in the stock market
To get a good grounding in the kind of factors you’ll need to consider when entering the stock market for the first time, spend some time reading useful guides such as this beginners’ low down from The Guardian. Go Compare’s Cover magazine also offers a comprehensive and very useful set of guidelines and considerations in its article of advice for new investors.
In the UK, everyone is able to invest up to £11,520 a year without having to pay income or capital gains tax on any profit. Half of this money can also be invested in a Cash ISA, if you’d prefer, or you can choose to put the whole amount into stocks and shares. However, you will need to pay a 10 per cent tax on any dividends you earn and these will be deducted at the source.
A simple guide to stocks and shares
When buying stocks in a company, you are essentially agreeing to lend money to a company. You will be one of many people investing in a company and you are hoping that the company will perform well and that you will be rewarded for your investment. When buying shares, you are agreeing to own a small part of a company and are hoping to be compensated for your stake in its wellbeing. Some shares even give you a vote in how the company is run. Understand more about the difference between stocks and shares with a no nonsense explanation from Tradimo.
The independent Money Advice Service is a useful resource for anyone who is thinking about making their first foray into investing in stocks and shares. Familiarise yourself with their investing in shares page for a selection of unbiased advice for budding investors. Shares Explained also offers a step by step guide to buying shares, which lays out the kind of things you’ll want to consider at every stage.
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