Investing in the stock market is a good way grow your wealth long-term, but for newcomers, buying and selling shares may seem daunting.\u00a0<\/font><\/p>\n So here is our guide to getting started in the stock market and becoming a smarter investor even if you already buy and hold shares.<\/font><\/p>\n Long-term gains: How the FTSE All-Share Index has performed over the past 30 years. The Red line shows the share price capital return and the blue line the total return with dividends included<\/p>\n Dividends are payments made to shareholders from a company\u2019s profits, but even profitable businesses do not have to pay dividends. The directors may decide to keep some cash in the firm for expansion. <\/font><\/p>\n British company dividends are generally paid twice a year and shareholders can either take the cash or choose to use the money to buy more shares in the company.<\/font><\/p>\n Some investors buy shares in companies that typically pay high dividends in order to create an income, even if they do not expect the shares to rise rapidly in value. <\/font><\/p>\n Reinvesting dividends in shares can dramatically increase returns over the longer term. Just so long as the shares go up.<\/font><\/p>\n The Barclays Equity Gilt Study, One of the big winners for those investing over the long-term is reinvested dividends, which allows you to benefit from <\/font>compounding. <\/font><\/p>\n The <\/p>\n THE MINOR INVESTOR: An honest look at a year’s investing – and the mistakes that I made along the way<\/p>\n Six simple steps for wiser investing – and a better chance of higher returns<\/p>\n How to invest in funds, investment trusts and ETFs – and save money as a DIY investor<\/p>\n The Investing Show: Ten dividend shares for the next five years<\/p>\n \u00a0<\/font><\/p>\n \n Some shares can cost less than 1p each, while others can cost more than \u00a350. But low-priced shares are not necessarily better value.<\/font><\/p>\n \u00a0In fact, companies whose shares cost just a few pence are often involved in risky industries, such as mining exploration or technology.\u00a0What matters most is whether or not you believe a firm is going to do well.\u00a0<\/font><\/p>\n If you want to value shares, then you need to do so using one of the typical valuation methods. The most commonly used is the price-to-earnings ratio or P\/E. This compares a company’s share price to the profits it makes per share.<\/font><\/p>\n A company with a P\/E of 10 is being valued at a lower level than a company with a P\/E of 20. This maybe because it is judged to have poor growth prospects or because the market has overlooked it. Always compare share valuations to the kind of company that it is, its peers and the market as a whole.\u00a0<\/font><\/p>\n > Read our guide to understanding share data and company balance sheets<\/font><\/font><\/p>\n Over the long term, the single most important factor is rising profits, or the expectation of them. <\/font> If the overall stock market is rising, many shares will be dragged up in its wake and if stockbrokers are optimistic about a particular sector \u2013 property for example \u2013 then shares in companies in the property sector will benefit.<\/font><\/p>\n Remember that the market looks at the future, not the past, so brokers and big investors are far more interested in how a company is expected to do in the years ahead than how it performed last year.\u00a0<\/font><\/p>\n Sentiment is a key driver when it comes to share prices. If the market doesn’t like a company for whatever reason, its share price can remain depressed even as it continues to grow profits.<\/font><\/p>\n In contrast, the market may have decided that it loves a company – these are often called story stocks – and rate it more highly than you would expect.<\/font><\/p>\n These anomalies in valuation can provide opportunities for investors.\u00a0<\/font><\/p>\n Picking individual shares is not for everyone. <\/font>You need to <\/font>make sure you research companies very The A simple way around this is to invest Fund managers will tell you that the Of course, investing in shares and funds does not have to be mutually exclusive. One investing idea is to build a core portfolio of funds and use a smaller part of your portfolio to add some spice by dabbling in picking individual shares. <\/font><\/p>\n \n When a company first floats on the stock market, such as Royal Mail did, it is sometimes possible to apply for shares directly from that firm. This is known as an Initial Public Offering (IPO).<\/font><\/p>\n Generally, however, shares are bought through a stockbroker or a financial services firm. <\/font><\/p>\n Many of these firms allow investors to buy and sell shares online simply by filling out an online form. Investors can also buy and sell shares over the phone by ringing a stockbroker or a financial adviser.<\/font><\/p>\n The best bet for a DIY investor is These will allow you to set up an Most This is Money’s best DIY investing platforms round-up, highlights some of our favoured platforms and explains how their charging works.<\/font><\/p>\n Costs vary according to the service you need. If you are just buying or selling online \u2013 known as execution-only trading \u2013 flat fees can cost as little as \u00a32.50 or up to about \u00a315.\u00a0<\/font><\/p>\n The more trades you do, the cheaper each one is. Stamp duty of 0.5 per cent is charged on purchases of shares outside the junior AIM market.<\/font><\/p>\n Some investors like to seek help from their brokers. Many offer \u2018discretionary\u2019 services, where they run a share portfolio on your behalf, as well as \u2018advisory\u2019 services, where they offer advice but leave it to you to decide what to buy and sell and when. The more advice you take, the more it costs.<\/font><\/p>\n Main Market: The flagship market of the London Stock Exchange. Large, established companies are listed on this market and they have to satisfy certain regulations before they are allowed to join it. <\/font><\/p>\n AIM: Originally called the Alternative Investment Market. Also part of the London Stock Exchange, it is designed for smaller companies. The regulations are less strict than for the Main Market, but companies still have to satisfy certain criteria before joining. <\/font><\/p>\n Income Stock: Shares that pay generous dividends are known as income stocks because\u00a0 they provide shareholders with an annual income.<\/font><\/p>\n Growth Stock: Fast-growing companies, often small and on AIM, are known as growth stocks. They rarely pay a dividend. <\/font><\/p>\n Yield: If you buy a share at 100p and the company pays a dividend of 5p, that share is offering a 5 per cent yield. The yield is calculated by dividing the dividend by the share price and multiplying by 100. <\/font><\/p>\n Capital Gain: If you buy a share at 100p and sell it at 120p, the 20p that you have made is referred to as a capital gain. <\/font><\/p>\n This depends on what service you want. Investors who just want to trade online may be tempted to seek out the cheapest provider.\u00a0<\/font><\/p>\n That is fine, as long as the firm is regulated by the Financial Conduct Authority.\u00a0<\/font><\/p>\n Some investors may prefer dealing with a firm whose name they recognise and websites differ too,\u00a0 so it is important to find one that is easy to navigate. <\/font><\/p>\n Investors who are looking for advice as well as trading services should talk to a range of brokers before making any firm decision. Look for a broker that you trust and respect.\u00a0 <\/font><\/font><\/p>\n Shareholders can be divided into traders and investors. <\/font><\/p>\n Traders buy and sell shares frequently, hoping to make quick profits. Investors hold on to their shares for at least five years and generally a lot longer. <\/font><\/p>\n Long-term investment in shares should prove rewarding, particularly when investors reinvest their dividends to acquire more shares. <\/font><\/p>\n Sometimes, however, if a share has risen significantly, investors might choose to sell some of their stock. This is known as top-slicing.\u00a0<\/font><\/p>\n The first point to consider is whether you can afford to lose the money. Shares are not risk-free investments, so if you need the cash to pay the mortgage or school fees, tread very carefully.<\/font> Read a company\u2019s latest annual report, look at its website and seek advice from your broker. Think about your investment aims and your time horizon, too.<\/font><\/p>\n This will influence the type of shares that you want to buy. Big, stable companies with decent dividends tend to deliver long-term rewards. Smaller, riskier companies can offer short-term excitement.<\/font><\/p>\n Finally, if you do fancy trading, rather than investing, it can be helpful to set price targets so that you sell at least some of your shares once you have made a profit.\u00a0<\/font><\/p>\n","protected":false},"excerpt":{"rendered":" How to invest in shares: Your complete guide to joining the excitement of the stock market By Joanne Hart, Financial Mail on Sunday and Simon Lambert Published: 22:32 GMT, 11… <\/p>\n","protected":false},"author":1,"featured_media":241,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[29,31,30,33,32],"views":87,"_links":{"self":[{"href":"http:\/\/forefrontnews.cn\/index.php?rest_route=\/wp\/v2\/posts\/240"}],"collection":[{"href":"http:\/\/forefrontnews.cn\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/forefrontnews.cn\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/forefrontnews.cn\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/forefrontnews.cn\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=240"}],"version-history":[{"count":0,"href":"http:\/\/forefrontnews.cn\/index.php?rest_route=\/wp\/v2\/posts\/240\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/forefrontnews.cn\/index.php?rest_route=\/wp\/v2\/media\/241"}],"wp:attachment":[{"href":"http:\/\/forefrontnews.cn\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=240"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/forefrontnews.cn\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=240"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/forefrontnews.cn\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=240"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![](\"http:\/\/forefrontnews.cn\/finance2news\/wp-content\/uploads\/1221\/yuyiojc5a50.jpg\")
<\/p>\n![](\"http:\/\/forefrontnews.cn\/finance2news\/wp-content\/uploads\/1221\/tjybn02m2oo.jpg\")
<\/p>\n<\/p>\nThe power of dividends<\/font><\/h2>\n
\n which looks at long-term results from investing, shows that over a
\nten-year period the average annual investment return from shares
\nadjusted for inflation is 5 per cent.<\/font><\/p>\n
\n Barclays study, which uses data stretching back to the nineteenth
\ncentury, highlights the importance of reinvesting income. ‘One hundred
\npounds invested in equities at the end of 1899 would be worth just \u00a3191
\nin real terms without the reinvestment of dividend income, but with
\nreinvestment the portfolio would have grown to \u00a328,386,’ it says.<\/font><\/p>\nMore…<\/h4>\n
Should I stick to shares that <\/font>cost less?<\/font><\/h2>\n
What makes shares<\/font> go up or down?<\/font><\/h2>\n
Several other factors influence price, though.\u00a0<\/font><\/p>\nSHOULD YOU INVEST IN FUNDS OR INVESTMENT TRUSTS?<\/h3>\n
\n carefully, learn to understand how to read their balance sheets and
\nfinancial statistics and don\u2019t just get swept along by what the hot tips
\n of the moment are.<\/font><\/p>\n
\n classic share investor\u2019s mistake is to buy too few different companies.
\n A report by specialist magazine Investors Chronicle said the ideal
\nnumber of shares for a portfolio is 15, spread across different sectors.<\/font><\/p>\n
\n in either active funds or investment trusts, where a fund manager
\nchooses a basket of shares for you, or in passive tracker funds or
\nexchange traded funds, which follow an index up or down.<\/font><\/p>\n
\nadvantage of an active fund is their expertise but you actually have to
\nchoose the right manager to benefit from this. Many consistently fail to
\n beat their benchmark and still levy their fees – a handful do actually
\noutperform year after year.<\/font><\/p>\n<\/h2>\n
How do I buy and sell shares?<\/font><\/h2>\n
\none of the many investing platforms available, ranging from those that
\noffer funds only, to those that allow you to invest across shares,
\nfunds, investment trusts, bonds and more.<\/font><\/p>\n
\naccount online and then pay in a lump sum to invest how you choose, or
\nsign up for regular direct debit monthly payments into a selection of
\ninvestments – or do both.<\/font><\/p>\n
\n platforms are very simple to use and easy to get used to. They will
\noffer varying degrees of tips, analysis, tools and service.<\/font><\/p>\nHow much does it cost<\/font> to buy and sell shares?<\/font><\/h2>\n
JARGON BUSTING<\/h3>\n
How do I choose which<\/font> stockbroker to use?<\/font><\/h2>\n
How long should I hold shares?<\/font><\/h2>\n
What should I consider before<\/font> buying?<\/font><\/h2>\n
It is also useful to do your own research.\u00a0<\/font><\/p>\n