Buying shares has always been regarded as a relatively successful form of investment. Profits are gained through the receipt of dividends and from the increased value of the shares when they are sold. Historically, share prices rise and so profits in trading shares rise. Although for many years this has been a good form of investment, it has its risks. Share prices can go down as well as up. As a short term investment, the potential gains and potential losses are likely to be greater. It’s best to see buying and selling shares as a steady long term investment.
When buying shares its usually best not to keep all your eggs in one basket, but to spread the risk by holding a diverse portfolio of shares. If you have all your shares in the oil sector and the sector rockets, all well and good. However if there is a slump, in that sector you could be in real trouble.
Which shares should I buy? .
It is probably wise to start with shares in blue chip companies in the FTSE 100, but you may want to dabble in the FTSE 250. Shares in the Alternative Investment Market (AIM) are likely to be more risky. Research is essential. Check out the recent trend in share prices and follow the news. Some people see success through investing in companies that they already know about and where they can see the potential opportunities or pitfalls for the business ahead. There are plenty of sites such as Reuters where you can get up to date share prices as well as share price history.