Interested In Investing In Shares?

by News Guy on January 23, 2013

Many people are interested in investing in shares, but are scared to actually invest because they do not think that they know enough to make good decisions.  They would be happy to know that investing in shares is pretty easy and anyone can invest in shares once they learn a little bit about the process and the benefits and risks involved.  There are several different ways to invest in shares and any potential investor should learn about each way before deciding which method to use.

The Benefits

There are a number of benefits associated with investing in shares.  One of the biggest benefits is the potential capital gains from purchasing shares that can increase in value as time passes.  Capital gains often are subject to a lower tax rate than income, allowing you to save a significant amount of money on your earnings.  Some shares pay dividends on a routine schedule, allowing you to increase your net worth without having to sell your shares.  Because of these benefits, investing in shares is considered one of the best ways to invest.

The Risks

There are also some risks that are associated with investing in shares that every investor should be aware of.  The values of the shares purchased are tied to the performance of a company, so there is no guarantee that they will rise in value.  Shares can fall quite dramatically, as far as to zero, so the investor must carefully monitor the value of their shares so that they can sell them at the right time to make a profit.  Another risk of owning shares is if the company fails, the shareholders are the last ones to receive payment, so you may lose your investment if you are not careful.

Various Methods Of Investing

Brokers – One of the most popular ways to invest in shares is to buy them through a broker.  Brokers will invest in shares carried by the major securities exchanges based on the wishes of the investor, the price of the shares, and the shares’ past performance.  New investors often rely on the experience of brokers to help them make the right investing decisions.

Direct Buying – Investors may choose to purchase individual shares directly from an online trading account or from the company issuing the shares.  This gives investors the greatest amount of control over the shares that they choose to buy or sell.

Index Investing – Index investing allows investors to invest in a range of companies with minimal effort.  The shares included in each index are predetermined and often have lower fees than investing with a broker.  The past performance of the index should be researched thoroughly before making a decision.

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