Many
people look to the stock market to enhance their hard-earned money more
and more each year. Some people are not even aware of their
investments, because they can come in the form of pensions with their
place of employment. The company invests this
money in efforts to increase your retirement funds. In order to fully
understand what is happening with your money, you should understand how
the investments work.
The
stock market is an avenue for investors who want to sell or buy stocks,
shares or other things like government bonds. Within the United
Kingdom, the major stock market in this area is LSE (London Stock
Exchange. Every day a list is produced that includes indexes or
companies and how they are performing on the market. An index will be
compromised of a special list of certain companies, for example, within
the UK; the FTSE 100 is the most popular index. The Financial Times
Stock Exchange dictates the average overall performance of 100 of the
largest companies with in the UK that are listed on the stock market.
A
share is a small portion of a PIC (public limited company), owning one
of these shares will give you many rights. For example, you will gain a
portion of the profits and growth that the company experiences,
additionally you will obtain occasional accounts and reports from the
chosen company. Another exciting feature of owning a share of a company
is the fact that you are given the right to vote in various aspects of
what happens with the company.
Once
you purchase a share of a company you will receive something called a
share certificate, this will be your proof of ownership. This
certificate will contain the total value of the share, this will likely
not be the price that is listed upon the exchange and is specifically
for reasons of a legal matter. This will not affect the current value
the share currently holds on the market.
Typically,
as a shareholder, you will receive your profit in the form of a
dividend; these are paid on a twice per year basis. The way this works
is if the company makes a profit, you will as well and on the opposite
end of this spectrum if they do not make a profit, neither will you. If a
company does extremely well their value increases, which means the
value of the share you own will as well. If you should decide to sell
your share, you will only benefit from it, if the company has
experienced growth.
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