market -stock market issue 3

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38 marketthe  market 39the 

in quick trading, holding their shares for

a few days, hours or even minutes before

There have also been plenty of people

is a strategy requiring great dedication

and plenty of research and analysis of the

INVESTING FOR INCOMEInvestors in search of a steady stream of 

income and with less of an appetite for

trading may choose to invest in stocks

that pay a steady half yearly or quarterly 

night worrying whether share prices will

move against them but they also need

to be aware that dividends can be cut or

I

 why the stock market exists, what

about researching stocks and how to get

to grips with some of the key terms and

 A key reason that investors have

returned to the stock market after

the crash of 2008 is that leaving their

money with a bank or a building society 

nothing, because even the best savings

rates at around 3% produce a loss in

stocks that produce dividend income at

more than 4% looks attractive and they 

may also produce capital growth if their

“caveat emptor” , the

dividend nor the capital gain are

investment strategy to use to lower the

DAY TRADERFor some, stock market investing is a

intensity, prepared for the thrills and

are plenty of people who claim to have

made money buying and selling shares

investing 101

Before starting to invest in stocks and

shares it is as well to decide why and

how? The right strategy can help investors

through thick and thin because no one said

stock market investing was an easy ride.

 Stock market  

Part 3

Investing for income is a valid strategy 

 but it is as well to hold a variety of 

 way to do this is to buy a tracker fund,

one that invests in stocks within a

particular stock market index such as

 A good, cheap way of doing this is to

 buy shares in an exchange traded fund

exchanges just like the shares that these

considering investing in, to make sure

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40 marketthe  market 41the 

of its terms and whether it provides

income or whether the dividends on

can be bought and sold at any time

the market is open and apart from the

dealing costs, there are no other fees to

They are valued much less frequently 

DIY OR EMPLOYING A MANAGER 

funds is an important decision to take

it might not be better to hire someone

advisors (IFAs), banks and fund

managers offer such services in one form

they are “execution only” they merely 

carry out instructions that you give them,

 buying, selling and holding the stock for

 you agree with the broker his terms of 

reference – how much discretion you

 back to you periodically on the results

they have achieved from investing your

Inevitably there are able brokers and not

in advance by searching the web, speaking

to friends and reading their prospectuses

TAXIt is also worth spending time thinking

about how to avoid paying tax on your

most people will be investing income on

 which they have already paid income tax

Firstly, remember that each individual

from buying and selling shares are lower

entire allowance can be invested in stocks

and IFAs will all advise you or offer you

homework on terms, conditions and

 you (and also your partner) get a new 

allowance every year and they save you

personal pensions insulate you from

taxpayer you will also get an additional

 you cannot take your money out until

and dealing charges to take into

read the terms and conditions carefully 

so you understand the restrictions they 

discretionary investment services are

 Above all, once you have digested the

possible choices, checked the prices and

charges and considered your strategy,

some investment opportunities but the

chances are you will be able to seize

most successful investors, such as world

and invest long term in companies they 

understand and which have scope for

By Richard Willsher

“FOR SOME, STOCK MARKET INVESTINGIS A SORT OF SPORT. THEY ENGAGE IN

IT WITH GREAT INTENSITY, PREPAREDFOR THE THRILLS AND SPILLS OFFLUCTUATING PRICES.”

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