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Investing Explained:
Investing involves purchasing assets with the goal of generating a profitable return over time, often accompanied by potential capital growth. For example, this could be seen when a property’s value increases or a company’s share price rises above its purchase price.
Unlike saving, where funds earn interest with minimal risk, investing carries the risk of loss. For instance, if a company performs poorly, its share price might fall, leading to a decrease in the value of your investment.
Stocks and Shares:
- Shares represent ownership in a company and are issued to raise capital. Each share is a unit of ownership, while "stock" generally refers to the total ownership or holdings an investor has.
- Only shares of publicly-traded companies can be bought or sold on stock exchanges. In the UK, these companies are typically denoted as "plc" (public limited company). The London Stock Exchange lists nearly 2,000 such companies.
- Shares of companies listed on international stock exchanges are also available. Many investors find markets like the US attractive, with over 5,000 shares listed on the New York and Nasdaq exchanges.
