Shares are one of the four main investment types, along with cash, bonds and property. They carry risk, but they can offer the highest returns. This guide explains how they work, and what the risks can be, so you can decide whether shares might be right for you.
Top tip: before you make any decision about buying or selling shares or funds, find out as much as you can about the company or fund. Do your own research or get financial advice.
The price of a share will go up or down if people change their minds about how well the company is performing, or about the economic conditions it operates in. If a share price reduces then the value of your investment reduces as well.
However shares have historically provided better returns over the long run than the other main asset classes: property, cash or bonds.
Holding shares in just one company is very high risk. If that company gets into difficulties then you could lose some or all of your money. You can spread your risk by diversifying – buying shares in a variety of companies, and investing in other assets or countries – or by putting your money into pooled investments like a unit trust.
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This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or seek advice from a financial planner and seek tax advice from a registered tax agent. Information is current at the date of issue and may change.