About
share trading
 Publicly traded companies offer unit stakes
in their business that consumers can purchase through the
stock market. By purchasing a share, you essentially own
a percentage of the company issuing the share. The size of
your percentage for every unit bought depends on how many
shares were made available. There is also a limit to how
much of the company can be bought by investors since companies
usually offer only a percentage of the company in shares.
There
are generally two types of offerings available at the stock
market:
- New shares. This is the company’s
first time to offer public shares to investors.
- Existing
shares. Shares already circulating in the market.
As the value of shares is determined by supply
and demand, prices can fluctuate depending on market conditions.
Generally,
when a company is perceived to be performing well, the
price of the shares will go up as demand is generated
by more investors
wanting to buy shares in that company, and current investors
wanting to buy more. The overall economic climate can
also have a significant impact on stock prices, and both
local
and international conditions influence the value of shares.
By
investing in a company through its shares, you risk the
possibility of losing some or all of your invested
capital
if the company loses the confidence of the market or
if it goes out of business.
Nonetheless, the interest
in shares as an investment continues under normal market
conditions as share prices
tend to
go up over time. This makes shares a generally sound
long-term investment.
Another reason why investors purchase shares is because
publicly
traded companies usually pay a share of their profits
to shareholders through dividends.
Capital Growth
Capital growth refers to an increase
in the value of your initial investment. In other words,
this
is when
you can
make a profit
from selling our shares because the price has
gone up from the price you bought them.
Should you make a
profit because of capital growth, a capital gains tax will
be charged to your earnings.
Dividends
Publicly traded companies give their
shareholders a part of their profits through dividends.
As the company
generates
profit,
a share of the earnings is set aside to
pay for dividends at the next period. The actual amount
of the dividend
per share
is based on the size of the total dividend
as well as the number of shares in the company.
Usually
dividends are paid annually, or twice a year.
Sourcing a
Stock Broker
Stockbrokers are listed in the yellow pages
and online. The following organisations
can also
help you source
a stockbroker
for your investment needs:
Association
of Private Client Investment Managers and Stockbrokers
(APCIMS)
112 Middlesex Street
London
E1 7HY
Telephone: (020) 7247 7080
Website: http://www.apcims.co.uk
The London Stock Exchange
(LSE)
Old Broad Street
London
EC2N 1HP
Telephone: (020) 7797 1000
Website: http://www.londonstockexchange.com
|
