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What is a share

What is a share – and more to that!

What is a share?
One share is a divided entity of the value of a company. One share can and will go up and down in value for various reasons that affect this movement. Here’s an example to understand the value of a stock: if a company values ​​100 million pounds, and there are 50 million shares, each share is worth £2 (usually listed as 200p).

The companies “sell” shares to collect money and investors (you in this case) buy stocks in companies. As an investor, they buy shares because they think the company will succeed and they want to share their success.

What is a share

Two options for trading stocks
Either own shares or pool your money with other people in a collective investment known as a fund.

If this is the first time, the second option is slightly safer, so invest in the pool. It’s safer because you do not put all your eggs in a basket (because you not only invest in a company) and that means you can drive out some bumps on the market.

How many years will should I invest in
You should invest for at least five years after, it gives enough time to drive out any barriers in the market that could lead to a loss of your money. If you feel that you are in a hurry and needs your money during this time, we do not recommend you to deposit this money in stocks.

Placing all your stock money in just one company is a high risk
If that company is in trouble, you may lose some or all of your money. Therefore, it is better to spread the risk by buying shares in different companies. It is very attractive to try to read the market in advance but this is almost impossible. Even if you feel you are an experienced investor, it’s difficult to read the market early, most people get wrong. By pulling out of the market as soon as some fall or try to guess when a share reaches its peak, you can lose sharp rebounds or see the price go down again.

Invest regularly, instead – in investment lingo, this is called “drip feed” – to pull out some up and down. This gives you an additional advantage of something called “pound costing value”.

This is how it works:
If you invested a lump sum of £ 10,000 and bought shares worth $ 10, you would have 1,000 shares. If you bought 5,000 kronor of the same shares per month over two months (totaling 10,000 kronor in total), you would buy 500 shares in the first month.

However, if the stock price fell to £ 9.50 in the second month, you could buy 526 shares, because the shares are at a lower price. So, instead of just getting 1000 shares at your £ 10,000, two payments of £ 5,000 buy you 1,026 shares.

Your first port of call should be to invest in an ISA.

The current ISA limit is at  £ 20,000 and as investors now it is a desirable route. This is a great way to reap tax benefits while investing your money and that most platforms allow this.

But how much you will benefit from moving your shares into shares and shares ISA will also depend on things like whether you get maximum your capital gains tax (CGT).

If you have more than £ 20,000 to invest, you can place the first £ 20,000 in an ISA. Then it’s smart to invest the rest by using an independent trading account. For full details of investments in equities and shares, read the ISA Wizard Shares and Shares that you found under our articles.

To make money investing – there are two different ways:
The first is when the shares increase in value and you get a nice little profit when you sell them. The other is when they pay dividends.

Dividends can explain by way of comparison that it is as interest on a savings account. Let’s say that companies make a profit, then they want to give you a little bit of profit, either on a regular or once-off basis. And just like you have a personal savings contribution for savings on savings, you also have a dividend allowance every tax year in which the first £ 5,000 you receive is tax-free.

Any dividends received above this allowance are taxed – at 7.5% for basic taxpayers, 32.5% for higher taxpayers and 38.1% for additional taxpayers.

Should you be higher or extra taxable, you must inform this to HMRC.

Watch out for fraud!
Should you suddenly be contacted by someone who offers you to invest in shares, say NO! In almost 95% of these cases it’s certainly a bluff, often called “boiler room” bluff. Here are fraud to call cold investors who offer them useless, overvalued or even non-existent shares.

These stories usually end with investing usually losing their money. Important to think, it sounds too good to be true to trust that feeling.

Some written rules regarding investment
In order for you to have a good investment trip, we recommend following the five golden rules below:

1. The greater the return you want the greater the risk you will usually accept. Taking bigger risks is usually the wisest and the younger you are the more time you have to add some drops on the market.

2. Dont invest all your money in a single company. Lower your risk exposure by trying to diversify so much. Thus invest in different companies, industries and regions.

3. Do not take too much risk if you intend to save in a shorter term. The standard recommendation is to invest in my 5 years. If you do not have this option, it’s best to actually avoid investing, put your money into a savings account instead.

4. Review your portfolio. A fund may be a dud or you may not be willing to take as many risks as you did before. This may result in a fund account losing money if you do not take the time to review your portfolio regularly.

5. Do not panic. Investments will go up and down during the trip. It’s important not to be tempted to sell or buy money just because everyone else does.

Do you feel unsure about where to start but have always had an eye on Royal Mail shares or have always been interested in investing in Marks & Spencer?
Then we have good news for you, driving shares is not complicated at all!

The absolute easiest and cheapest option is to buy online shares from a “share trading platform”. With these platforms you can buy shares from all listed companies and different foreign exchanges. There is the main exchange – London Stock Exchange, where you get a lot of companies including the really big players like Marks & Spencer. Then there is the alternative market (AIM), which lists less-developed companies that you may not have heard of.

If the company is listed on the stock exchange, you can buy a stocks in it!
The company gives an initial public offer after they are listed on the stock exchange. Thus, a process that takes companies from being private to the public so that they can eventually buy shares in this company.

Shares listed on the stock exchange can always be sold or purchased. The price is determined by the demand and supply, which is determined by the potential buyers and sellers at any time. High demand increases the cost and low demand reduces the cost of the stock. You must always open an account to buy the stock you are looking for, even if you know exactly what share you want to buy. Remember to make sure that there is enough of money before you buy the stock.

When you’re sure of your decision, just log in to your account and search for the share you are interested in buying. You can choose to buy a certain amount or value – depending on what you choose, you must have enough money in your management account to cover both this and any handling fees. Once you have chosen how you want to change a price, you will quote when you have accepted the price that the shares will show in your portfolio.

Paper Stocks
Before things were moved online, all shares were traded through paper certificates, in other words: paper shares are old news. Paper shares are both a more expensive and more difficult option. The fastest option is actually online trading, not just for you but also the stock exchange management is extremely smoother online.

Save time means saving money, so if you still feel to trade in paper stock certificates, you will be “punished” for this by the broker. Because the broker has to spend more of his time and thus your money on the trade. If you have not already switched to online shares, we recommend you to do so. It usually goes smoothly and in most cases is also free. You only need to fill in a form and a few days later you have your stocks in online shares instead.

paper stocks

What Charges are Most Common?
This is one of the biggest things to consider when buying (and selling) shares is how much it costs you in fees. Here are some important points to be aware of:

Account fee: This fees can occur in monthly, quarterly or as a annual fee. In some cases, this will be waived if you make a minimum number of transactions or your account is of a certain size.

Inactivity fee: If you do not make a certain number of transactions within a certain period of time, an inactivation fee may be added. Most platforms do not charge these days as a bonus to attract you.

Buy / Sell Shares: The fee you pay each time you buy or sell shares. You often find discounts for regular traders.

Stamp fee: When buying UK shares, you are expected to pay 0.5% stamp duty and an additional £ 1 on transactions over £ 10,000.

Dummy portfolios
If you feel worried about diving into the trading world, but you’re still serious and curios, dummies are a good start! With dummys portfolios you can build up your confidence.

Many of the platforms currently have dummy or virtual portfolios that you can train with. It works in exactly the same way as you would buy real money, it’s simply a support to get a better understanding and get ready to use real money in the future. So if you make a mistake i a dummy, you can learn from it without any harm done.

You must be an existing investment customer with some companies first before allowing you to configure virtual portfolios together with your real ones.

Shareholder Benefits
While investing should be chosen because they can hopefully give you some money, shareholder benefits can be a welcome bonus. When paper certificates were more current, this gave automatically, but it does not automatically take longer. There are some platforms that send them through the accounts.

For example, a simple search shows that if you purchase Marks & Spencer shares through a platform like Hargreaves Lansdown, you will send coupons offering discounts across the product areas Marks & Spencer. To get these, you need to get in touch with the broker – the same applies if you want to participate in shareholders meetings.

 

sell shares

 

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John Tempelton – one of the gratest traders
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A guide for beginners in currency trading

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