Investing in the stock market
For most people, investing involves the stock market. This is where you buy shares in one or more companies with the aim of making a profit. When you invest in one of our funds, we do this for you.
There are stock markets all over the world, with some of the bigger ones including America’s New York Stock Exchange and the UK’s London Stock Exchange. They are places where investors can connect with others to buy and sell investments.
The concept of the stock market is like any other market where you can buy and sell things. But instead of goods, you’re buying shares in a company. If you buy shares in Amazon, for example, you own a small part of that business and get to share in the company's success - or if you’re unlucky - its failure.
In a nutshell, if the price of the shares go up, you make a profit when you sell. If the price goes down and you sell, you make a loss, and the value of your investments could fall.
What influences share prices?
Share prices are influenced by various things such as how well a company is performing and the general health of the economy. Other factors sometimes come into play too, for example, certain industries performing well or particularly badly following a major event or news story. International political developments can also have an impact.
One thing to keep in mind is that investing in the stock market should be for the longer term, usually 5 to 10 years minimum, so you are more likely to get through the ups and downs. It’s also important not to panic and sell your investments at the first sign of a drop in value. We would recommend first speaking to a financial adviser. While never guaranteed, the stock market has always regained its value historically over the longer term, and tends to outperform money held in savings accounts.
