To many people the words stock market and dealing in stocks and shares still conjure up the classic images of city slickers wearing pinstripe suits, red braces, drinking champagne and driving Porsches.
But what does this mean in reality today? Although the red braces have to a large extent gone, the City and its traders are still very much alive and kicking. However, simple share dealing is no longer solely the domain of wealthy individuals. Anyone can access the market today, providing of course that they know what they are doing and have available money to invest.
But if you want to start share dealing yourself how do you actually do it?
And what should you know before you start?
One of the most important things to remember about share dealing is knowledge is power. Information is vital – you must know what you are doing and have an understanding of how things work.
It is also very important to remember that prices really can go down as well as up. It is perfectly possible to lose money, therefore you need to think about how much you can afford to invest. In coming to this decision you will need to consider your appetite for risk as well as your personal circumstances and the reasons for you investing.
Share dealing is not simply about making a fast profit and in fact stock market investment is better suited to medium or long term investment. There are strategies and instruments that people use to trade over the short term. However, these are generally used by more experienced investors or professionals.
There are many ways to access the stock market. Broadly speaking you can either invest directly in individual shares (Share Dealing) or collective investments such as an Investment Trust, Unit Trust or an Open Ended Investment Company (OEIC), Exchange Traded Fund (ETF) or Exchange Traded Commodity (ETC).
Direct share dealing gives you more freedom than a collective investment as you choose the individual shares. However, collective investments allow investors to pool their money, spread their risk and benefit from professional fund management.