About Shares
Buying shares has been a popular activity for many years. There are more than 2300 shares listed on the main UK market and 700 on AIM, from big household names such as Marks & Spencer and Tesco to smaller businesses such as Eidos, the technology company.
As a shareholder you have a say in the company's affairs by voting at company meetings and, of course, the ability to share in its fortunes. If the company does well, the value of your investment should rise but if it does badly, you could see your shares fall in value.
There are two ways you can benefit from owning shares. The first way is through the growth of the company. If the company continues to make profits, demand for its shares will grow and the share price will rise. This type of company, known as a growth stock, is popular with investors who do not need income from their investments.
Many companies also pay a dividend. If a company has a good year and decides to pay 10p per share as a dividend, owning 10,000 shares would give you a total dividend income of £1000. Shares that pay dividends are generally known as ‘Income’ stocks. Companies can return money to shareholders in other ways too such as buying back their shares. This increases the value of those shares still in circulation.
By investing in shares you are also linking your financial wealth to the health of the UK and overseas economies. The proportion of goods and services sold in the UK and abroad typically rises when economies are growing and falls when in recession, thus affecting profits.
Since share prices can fall as well as rise, this is not a reason for you to stay out of the stock market, but it should help you recognise the importance of building a broad portfolio with shares in different companies, industries and, even, countries. At Twowaymarkets, we offer shares from 22 different countries.
Learn more about the markets we offer by clicking here.
