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How to Start Investing in Stocks: A Beginner's Guide
History also tells us that the longer an investment in shares is held for, the better chance it has of beating the return offered by a normal savings account. This is why we always recommend taking a long-term view when investing in shares. So why do share prices go up and down? The price of a share is determined by supply and demand. Demand for a share is essentially the number of people who would like to buy, and supply is the number who want to sell. This will depend on what investors think about the future prospects of the company.
Are things set to improve or get worse?
If the outlook is improving, more people might want to buy the shares and the share price might increase. For example, an increase in consumer confidence can lead to extra spending, raising the prospects for future profitability.
A mining company, for example, is open to changes in the price of the commodity it mines. If the company is doing better or worse than its competitors, this can serve to support or depress the share price. This means it is important to keep up to date with current news on the companies whose shares you own. To help, Hargreaves Lansdown offer research and comment on around of the most widely-held shares in the UK.
The Hargreaves Lansdown website includes a factsheet for every share that you can buy and sell with us. It will look something like the below example:. In this example, you can buy the shares for 4,p each and sell them for 4,p each. The number on the right of the prices is the daily movement. This shows that, since the last time the market opened, the share has fallen in price by The graph underneath the prices, charts the share price over the previous 12 months. Shares are traded very frequently, and on most business days the UK stock market is open for trading between 8am and 4.
All share prices and performance charts are free to view on the Hargreaves Lansdown website. While shares are most frequently traded on the stock exchange, the first opportunity investors get to buy shares is when they are first created. When shares in a company are issued for the first time, the ownership of the company, which may have been family owned or in private hands, is split into shares. These shares are then offered for sale to the public.
Once the shares have been issued, anyone can buy and sell them. There are many reasons why companies do this. It could be to raise money to fund future investments or so that an early investor can withdraw some of their money. Once a company has created shares, they can be bought and sold via the stock exchange.
How shares work
Because buying and selling shares in this way comes after the IPO stage, it is known as the secondary market. When you buy shares on the secondary market, you do so by using the services of a stockbroker. The vast majority of accounts are held online offering a range of ways to deal shares. Execution-only is DIY investing. This way of investing usually has the lowest costs. An advisory service involves taking advice from a financial expert based upon your personal circumstances, attitude to investment risk and financial goals.
Your adviser will suggest investments based on your investment goals and financial position. The cost of financial advice will vary based on how much advice you need and the amount of money you have available to invest. Discretionary management means leaving the management of your investments to the experts, with all investment decisions being made on your behalf. Discretionary management is suitable for those with larger portfolios and limited time or expertise. The cost of discretionary management services will depend on how much money you have to invest and the types of investments made.
A common misconception is that you have to have a large sum to start investing. While investing a lump sum is certainly possible, you can also regularly invest smaller sums, known as regular savings. Not only is this an affordable route into building an investment portfolio, but it can help to reduce risk.
This means the share price going up and down can actually benefit you as you could end up purchasing more shares, but conversely it should be remembered that if the share price rises and never looks back, fewer shares are purchased via regular savings and investors could have been better served by investing a lump sum.
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Many people find themselves with a lump sum at some point in their lives. This could be through inheritance, a bonus or cash from the sale of a home. You can find out which Hargreaves Lansdown account is best for you below. Buying shares is quick and easy through Hargreaves Lansdown. You can open an account in under 5 minutes and start dealing shares immediately. Find out more. Our award-winning service is designed to be simple and easy to use, and it puts you in control of how much you want to invest, where.
You can open any account with a lump sum using a debit card or by starting a monthly direct debit. More on dealing accounts. More on ISAs.
Get the basics
More on our full range of accounts. For some ideas on how to pick which shares to invest in, check out our guide to selecting shares or for more information on getting started with investing generally, you can read our Guide to Investing.
Download your free guide to picking shares. Home Beginners guide to shares and the stock market. Your guide to shares and the stock market A plain-English introduction to shares and dealing.
How to Invest in Share Market? A Beginner’s guide
Stocks and shares for beginners For newcomers to investing, the world of shares and the buzz of the stock market, can all seem a bit daunting. This guide will help you to Understand the basics Find out why share prices move Why buy shares? Get started dealing shares. Explore your simple guide to the stock market Helping you understand the basics of share dealing. What are shares?
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What is the stock market? Why buy shares? Share prices explained What makes a share price move. How to buy shares IPOs and the secondary market. Getting started share dealing Getting started picking shares. Important information Please remember that the value of investments, and any income from them, can fall as well as rise so you could get back less than you invest.
If you are unsure of the suitability of your investment please seek advice.