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How to Invest stocks
- What are stocks? One of the oldest and most traditional ways to invest is to buy stocks and shares in a company, which form the asset class more commonly known as equities. Historically, stocks have outperformed safer investments like bank accounts and bonds and can act as the real driver for growth in your investment portfolio. Stocks/ equities give you a greater potential for growth. But they also come with a higher investment risk. Generally, the more years until retirement and the longer you have to ride out short-term changes in the market the bigger the role stocks could play in your investment mix.
- The benefits of buying stocks: Shares are issued by companies as a means of raising money. Essentially, companies are selling part of their business to investors, and shares offer people outside the company the opportunity to receive profits if the company is successful. As you have become a part-owner of the company, you have certain voting rights and are given additional benefits beyond the receipt of profits. But generally, you have very little say in how the company is run.
- High Risk: However, investment in shares exposes you to the potential to lose some, or all, of your money. Shares are seen as the riskiest asset class, so you should take extreme care when you consider investing in equities and the different types available.