To a beginner, the stock market can appear rather daunting. But equities outperform cash and bonds over most medium and long-term periods and easy routes in are not hard to find. In reality, with dismal returns on offer from banks and building societies, investing in shares provides an opportunity to hedge against rising inflation and achieve greater returns than cash, bonds and property. In the UK, the main stock market is the London Stock Exchange, where public limited companies and other financial instruments such as government bonds and derivatives can be bought and sold.

The stock market is split into different indices - the most famous in the UK being the FTSE , comprising the largest companies. The most well-known indices come from the Footsie group - the FTSE , the FTSE , the FTSE Fledgling and the alternative investment market Aim , which mainly lists small and venture capital-backed companies.

There are two ways to access the stock market: Although 'directly' is a misnomer - investing in the stock market is always done through a third-party broker - direct investment means buying the shares in a single company and becoming a shareholder. There is a wide range of broker services available. These are online platforms where a client can buy and sell shares independently through a share dealing account without being offered advice.

Examples of these include Interactive Investor, Hargreaves Lansdown and The Share Centre. Regular trading will kill profits quickly, with the cost of buying and selling shares exceeding the returns you can make from a small starting stake. You can find the best online broker for your portfolio size thanks to our comprehensive list of the 24 major investment platforms and run down of their costs and tools.

Reading the financial press can be useful in terms of choosing which shares to buy, Bamford adds. Stick to companies you find interesting and spend the time researching a company before you invest.

An indirect approach is a more common way of accessing shares, as it spreads risk by investing in a number of companies. This can be done via an open-ended fund, such as an Oeic or unit trust, which is made up of shares typically from between 50 and companies, and can be sector, country or theme specific. Money in these funds is ring-fenced away from the fund provider, so if the firm defaults, the money is still safe.

An investment trust is another pooled investment, but it is structured in the same way as a limited company. Investors buy shares in the closed-end company, and it is listed on an index in the same way as a company such as Tesco or RBS. Trusts are less numerous than funds, but often have less expensive management charges. While most investment funds and trusts are actively managed products, run by a fund manager who handpicks stocks and has some direction over the performance of the fund, most exchange traded funds ETFs are passive products.

In this sense they simply aim to replicate an index such as the FTSE As index-linked products, they can access almost every area of the market.

ETFs may be cheaper than funds or trusts, as there is no active manager to pay for. However, as they simply track an index, if the index falls spectacularly, so will your investment.

All the investment vehicles described above can be accessed through a broker or fund platform, directly through the asset manager or through a wrapper such as a stocks and shares Isa. For a closer look at execution-only fund platforms to help you choose the right one for your circumstances, click here.

As for more complicated investments, Bamford has some words of advice for beginners: A fund-of-funds or a multi-manager fund, which is a single fund investing in a range of others, can be a good starting point for novices, as it demands little involvement from the investor. However, these types of funds are generally more expensive than sole-managed investment trusts and funds.

Money Observer compiles a hand-picked list of Rated Funds chosen on the basis of performance and consistency, although of course we cannot guarantee performance. For the full list of Rated Funds click here. There are several things that investors should be aware of before committing money to the stock market.

Tales of other people's huge gains can be tempting, but the market won't always go in your favour and you must be prepared to see your investment drop as well as rise. Risk and reward go hand-in-hand, and any investor must consider the potential downsides before investing,' says Chadborn.

The costs involved in buying funds, trusts, shares or ETFs can vary hugely, and higher fees can easily eat away at future returns. To ensure value for money, Chadborn highlights the importance of comparing charges on different products. That said, discount supermarkets and execution-only brokers don't offer advice, so for a novice investor, it may be better to seek independent advice from a financial adviser before making any investment decisions.

Without the help of a crystal ball, timing the market is impossible. Instead, look to invest regular premiums on a monthly basis rather than a depositing a lump sum into a fund. By drip-feeding money in, it's possible to negate the risk of market timing - if the market falls, the regular premium will simply buy shares at a cheaper price the following month.

If they aren't, try and understand why and then look to make changes if appropriate.

How to Invest in Stocks - Stock Investing - TheStreet

Order a copy of Money Observer's 'Your Fund Choices ' supplement, with expert analysis on rated funds and investment trusts. We make every effort to ensure our beginner's guides are kept up-to-date. However, in the constantly shifting environment of investment and financial services, occasions may arise where elements of a guide become out-of-date.

Please double-check the facts before taking any important financial decisions.

Be the first to receive expert investment news and analysis of shares, funds, regions and strategies we expect to deliver top returns, plus free access to the digital issues on your desktop or via the Money Observer App. Unless you can withstand a temporary or long term loss, on your investment, do not invest in the stock market.

The only person who can make money out of stocks and shares, are those who can hire a broker who can analyse the market, and buy or sell shares quickly. Unless you can afford to lose your investment,do not invest in shares, there are far safer more reliable investment opportunities, and most of them will not give you sleepless nights worrying about your investments.

There are many more fundamental concepts one needs to familiarise before investing in stocks than relying on online articles alone. I would strongly advise anyone looking to invest in stocks, or for that matter to understand the investment universe, to first obtain the certification Claritas Investment Certificate offered by CFA Institute.

Its at a basic level well worth the money spent and will go a long way to form a strategy by hedging against risks without solely focused on returns. For those who are very analytical and numbers savvy, the ultimate qualification in the financial industry - CFA - would be a perfect fit. For beginners, it is very important to understand how stock markets work before investing. The best way to learn and develop a knack for trading on the stock exchange is through experience.

For those of you who don't want to take the risk of losing money while learning to invest, there are virtual stock trading platforms like Trakinvest http: Because these platforms deal in virtual money, there are no risks involved and you can focus on learning through experience.

Back in the 70's I would walk into my Bank, look in the paper that was on the shelf, choose some shares and order them over the counter What has happened to that way of trading???? I have often wondered why locally-held courses of instruction, or adult education courses, on investment do not seem to exist: I cannot find any mentioned on the internet.

Anyway, I decided to do something about it, so, starting in November , morning and evening classes are being held at Robertsbridge Community College in East Sussex. There is a dedicated website giving details at www. There is an online stockbroker at www.

StockTrak Global Portfolio Simulations and Trading Room Software

Service is good and fuss-free as well. No extra charge for an ISA, but there is for a SIPP. I was frightened at the thought of opening my own share dealing account and not having a clue where to start. Allocate an amount of money to play with, start small, look for the various tips and watch the chosen shares for at least 2 weeks before you press the deal button. Choose Company's that are taking a hammering especially if the tipsters are backing them then buy low.

It is so simple and such fun, a bit like the Casino but let the money roll up or down and stay in tune with the markets. Forget quick profits, this is a 5 year cycle and in my first month I went down Better than savings rates.

What is the lowest amount of money that you can invest in the stock market with i. If you think it is 'hardly worth doing' then increase your monthly contribution and don't worry about people who want to start low as they find their feet. The deep end is over there! As I said via Twitter, the article is based on out-of-date, unsuccessful thinking. We live in a new climate, where world-wide issues predominate and where the so-called 'new mathematics' offers valid ways of interpreting economics and investing.

The financial press overall is a generation or two behind the real world as always? It is also in hock to advertisers peddling largely invalid products. So-called 'beginners' should not jump into investing at all, but should start by appreciating the fundamentals thereof.

Kogan Page - Page Not Found

And nobody these days should have much to do with stockbrokers, beginner or otherwise. But, if nobody should have anything to do with stockbrokers, how does one get started? How can you buy shares without a stockbroker and how much will it cost to buy and sell shares?

By stockbrokers I think you are referring to actual brokers who advise you on investments, if you are just starting out you are probably better going for the execution only type service. One of the cheapest is Share. About us Contact us Subscribe to magazine Digital Magazine Newsletter sign-up. Capital Conserver Purposeful portfolios: Regular Income Conservative Investment Trust portfolio Adventurous Investment Trust portfolio Mixed Asset: Tactical Asset Allocator Shares: How to invest in the stock market: Related articles Navigating turbulent stock markets: Spread betting and contracts for difference: Investing in stocks and shares: New issues and IPOs: Subscribe to Money Observer magazine.

Stocks and Shares Beginner's Guides. Comments Buying or investing in shares February 26, - 3: Best starter kit September 25, - I want to start investing but i dont know how to invest plz inform me.

Great Lesson for begineers May 7, - 9: Buying shares August 5, - Courses of instruction in investment September 29, - 9: Stockbroker charges September 29, - 9: DO IT YOURSELF SHARE DEALING September 7, - 6: The lowest amount June 2, - 5: Your article on investing for beginners July 21, - 6: Beginning September 2, - 8: Post new comment Your name: By submitting this form, you accept the Mollom privacy policy.

Model Portfolios Portfolio aim and duration Short-term growth Medium-term growth Long-term growth Immediate income Balanced income Growing income. Risk Profile Medium risk Higher risk. We recommend you stick to cash if you are likely to need access to your money within five years, as market volatility could leave you out of pocket over such a short period.

Higher risk portfolios invest more in areas such as smaller companies, emerging markets, commodities or private equity funds, as well as core equity holdings. We do not offer a low risk option, as the stock market is not appropriate for anyone uncomfortable with the idea that they might lose money, at least in the short term.

The pros and cons of cashing in a final salary pension. Tips on how to avoid the duds and spot winning shares on AIM. This simple tactic could boost your investment returns by 10 per cent.

Top Performing Funds Fund type: Investment funds Investment trusts Pension funds Offshore inv funds. Research Money Observer Rated Funds Find a Model Portfolio Compare Funds and Investment Trusts Browse Funds by Sector. Latest News Savings rates are on the rise: Nine savings accounts that are beating inflation. Interest rates held at 0. More Information About Us Advertise Privacy Statement. Sections Home Our Analysis How To Invest Beginner's Guides Investment basics Retirement Tax efficiency Funds and trusts Stocks and shares Property Alternative products By Investment Strategy Financial Planning Model Portfolios Research News and views.

Our other sites Interactive Investor Moneywise Share Price. Connect Subscribe to magazine Online editions Contact us.

MI Chelverton UK Equ Grth. Stan Life Inv UK Opps. Old Mutual UK Mid Cap. Old Mutual Equity 1. Columbia Thrdnedle UK Sel Tst.

Investing for Beginners 7 Steps to Understanding the Stock Market

Fidelity Special Values PLC. Artemis Alpha Tst plc.

Aurora Investment Trust plc. Invesco Perp Sel UK Eq plc. Stan Life UK Eq Unconstrained Pn. FL Old Mutual UK Mid Cap Pn. Aviva Old M UK MdCap Pn. SIP Old Mut UK Mcap Pn.

OMW Old Mutual Equity 1. OMW Old Mtl UK Mid Cap. Boost FTSE 3x LD ETP. Old Mutual UK SmCos Fcus. Boost FTSE 2x LD ETP. Old Mutual UK Dynmc Eq. Barclays GA UK Opps.