Stocks and Shares

Also known as stocks or equities, buying shares gives you part ownership of a business. The more shares you buy, the greater the stake of the business you own, and the more say you have in how itís run. In return for investing in the business, you can receive dividends and other benefits.

There are two main types of shares: ordinary and preference. Ordinary shares usually entitle you to vote at shareholder meetings and receive dividends, a proportion of the companyís post-tax profits. Preference shares have priority over ordinary shares when it comes to dividends and entitlement to company assets if the business is wound up.

Which shares you should buy depends on your reasons for investing. Some shares offer good growth, as their value rises quickly. Others provide income through dividends. You should remember that the value of shares can fall as well as rise, so you should always be prepared to lose your investment.

Over the long term, shares provide the greatest after-tax return of all major investment classes. They allow you to diversify or spread risk across a number of industries and economies. They are highly liquid - you can sell your shares whenever the market is open.


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