Stocks and shares can be very daunting for the newcomer, but you have a real chance to get a fantastic return on your investment by purchasing shares in a company on the stock market. It must be noted however that with any investment in shares, your share value can decrease in value just as quickly as it can rise, so you are also at risk of making a loss. We have a guide to purchasing shares for first time investors, to help you feel more confident in your future.
How do I start?
Depending on the company, be it JD Sports, Wynnstay PLC, Apple, or a company elsewhere, you will usually be looking at the secondary market. This is made up of companies who have already issued shares onto the stock market, so they are past the initial public offering (IPO) stage. Essentially, they are not first timers. Once a company has created shares, they can begin to be sold on the stock exchange, this is known as the secondary market. To purchase shares of a company on the stock exchange in the secondary market, or even the IPO stage, you will likely enlist the help of a professional stockbroker.
Do I have to have lots of money?
Believe it or not, you don’t necessarily have to have a large lump sum of money to make an investment. You can use an investment services company who offer accounts with monthly instalments as part of a regular savings plan. This way, you can invest using small monthly instalments considered as savings, rather than a large sum of money. This is a great way to build your investment portfolio and minimise the risks, particularly if you’re a beginner. Small, monthly investments have the potential to ride out any fluctuations in the market and may reap the benefits of changes in share prices, for example, you may be fortunate to purchase more shares for less money.
Pros of stocks
Investing in the stock market has the potential to provide you with a strong return on your investment over a long period of time. You can stay ahead of inflation, provide yourself with a regular income, change your investment depending on your personal needs, and invest in stocks to an amount that suits your financial circumstances. Not to mention, if done properly, stocks are easy to buy and easy to sell.
Cons of stocks
It is worth noting there is a potential to lose your entire investment when investing in the stock market. Whilst it’s easy to buy and sell, it’s time consuming. This isn’t something that takes a few weeks or months, you’ll be looking at making money over a long period of time, but if you have patience, it can certainly pay. The stock market certainly is volatile. Whilst over a long period of time the stock market has risen, this hasn’t come without its challenges and falls. You will notice the line of growth is not straight, and if you can ride out the storm, you’ll see the benefits pay off. Remember, you will lose money even if you know exactly what you’re doing.