The stock market can be a daunting experience for a beginner. However, investing in shares will provide you with an opportunity to gain greater returns. There are two different ways to have an access to the stock market: investing directly or indirectly.

Investing Directly

Direct investments mean you are buying shares from a single company and become one of their shareholders. There are many available broker services. Some offer tailored advice and bespoke services like Redmayne Bentley, Killik & Co, and Charles Stanley. However, there are also others who only execute share dealing services.

According to Martin Bamford, IFA Informed Choice’s managing director, it is better to have an online account for executing share dealing services for the newbies who want to dabble and involve more with individual shares. This type of account keeps your investing costs to a minimum.

He also added that reading some financial press could be helpful and useful in choosing the shares you want to buy. There are also a number of internet forums wherein you can find tips. Don’t invest your money just to look for tips since most of them are available free of charge. You should stick to companies which you find interesting. Also, try to spend time researching on such company before you invest.

Investing in BNZL is a good thing to start. The current Bunzl plc share price is worth the investment and will give you a higher return.

Investing indirectly

Indirect investments mean you are investing in a pool of investment funds. This type of investing is more common in accessing shares. However, it also spreads risk when investing in a number of companies.

As a beginner, it is better to use collective investment funds in accessing the stock market. This will allow you to use your collective buying power of funds in order to reduce charges on your starting portfolio. You can also have an access to professional fund managers to sell and buy individual shares, rather than making your own decisions.

Another pooled investment is an investment trust. However, this is structured similarly to a limited company. Investors can buy shares in a closed-end company. Trusts are lesser than funds but usually cheaper. Majority of trust funds and other funds are managed products. Fund managers who have direction on the fund’s performance and handpick stocks usually run these products. There are some funds which can be invested passively. This means they will just try to copy the performance of a certain index in a major stock market. These are known as tracker funds.

What are the things you need to be aware of?

There are some things that an investor should be careful of before investing their money in a stock market.

According to a certified financial planner in AWD Chase de Vere, Patrick Connolly, the first thing that you will do is to decide on what goal you’re going to achieve. You should also decide on how long you’re planning to invest, and how much risk you’re prepared to take. These things will help you choose an appropriate investment.

As an investor, you should also understand the investment’s structure. You should avoid looking at their glossy marketing material but instead focus on their fund factsheet. The costs of buying trusts, shares, or funds differ widely. You need to compare the charges you could incur on different products. You will benefit from cheaper initial charges when you directly buy from a supermarket fund.

Final Thoughts

You should remember that investments should be for a minimum of five years to improve any bumps in the stock market. However, this does not mean that once they are bought, you can already leave them unchecked. Try to review investments at least every six months to make sure that they are performing well and in line with your goals.

By David Morgan

© 2018 Copyright David Morgan - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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