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Page 13: Financial: Shares.

Please read on.

This is one of a whole range of new pages introduced into
the Surgery in the summer of 2005.

What are Shares?

Each individual share is a small stake in a company. Generally, if the company does well, the share rises in value, however, if the company performs poorly, a share price falls. This reflects the underlying value of the company as measured by such things as profits, returns on investment and earnings per share. Generally, there are two ways of profiting through share ownership:

  • Receiving income in the form of dividends,
  • Capital growth of the share price.

Risk and Reward

Depending on your investment objectives there are different types of companies to suit your needs. Investing in large blue chip household-name companies will usually see a steady, stable increase in the value of your shares. However, when investing in smaller, fast growing companies, although there is potential for very high growth in share value, there is also the risk of the shares rapidly depreciating. The general economic environment naturally influences the outlook and subsequent performance of shares.

Buying or Selling Shares

Before investing, you must look at the type of shares you want to buy, and the way in which you want to deal on the stockmarket. There are three main routes for investing in shares:

  • In a single company,
  • In a number of different companies; a portfolio of shares,
  • Within collective investments such as investment trusts and unit trusts, which pool a range of company's shares.

To buy or sell shares in the UK you need to use a stockbroker, who must be a member firm of the London Stock Exchange and authorised and regulated by the Financial Services Authority (FSA). Generally, there are three different services that a stockbroker can offer:

  • Execution only,
  • Advisory service,
  • Discretionary service.

Other Investments

As well as direct and collective equities, there are other types of investment that may form part of your portfolio. These could include gilts, bonds and other fixed interest securities. See our Future Dreams page for more background to investment. Before buying shares, do your research, use the Internet and take lots of professional advice.

Please read on.

Shares Hit 2003 High

(Saturday 16th August 2003 news story)

UK shares ended the week at their highest levels this year. The FTSE-100 finished up at 4247 after touching 4266.4, its highest since last August. Other indices hitting highs for the year were the FTSE-250, at 5513.5, the All-Share, at 2094.73, and TechMark, at 896.48.

Many private investors will be thinking back to 2001 when the FTSE-100 was close to 3000, and wishing they had invested more back then, while at the same looking further back to the end of 1999 when the FTSE-100 was close to 7000 and realising just how far shares have to go.


(Monday 10th February 2003 news story)

The FTSE-100 Index is worn-out, having hit a seven-year low today as fears of a looming conflict in Iraq keep investors away. The Footsie closed down 55.6 points at 3436, its fifth consecutive day of falls and has lost more than 50% of its peak of 6930.2 on December 31, 1999.

Dealers do not doubt a US-led war on Iraq will be launched, but the timing and the extent of the divisions between Western governments remain an issue and are poised to exacerbate economic uncertainty and push up oil prices.

Stock Market Gloom Spreads

(Wednesday 24th July 2002 news story)

The FTSE 100 share index has fallen once more today to a 6 year record, closing 80.9 points lower at 3777.1. Having been down 232 points mid-afternoon, the market did recover slightly but shares seem to be in terminal freefall. It has lost over 500 points since it closed last Thursday. The latest quarterly report from the Confederation of British Industry did little to raise spirits, suggesting that industry’s recovery could take more time than expected.

We wish we could report more good news than bad, on Money Surgery. Unfortunately, there's not much to shout about. If you've invested in property or gold some time ago, you should be okay. If you're using 0 percent credit cards to get rid of debts or really low mortgage interest rates to remortgage, you might have more to smile about. Those of us with share-based investments, like pension schemes, endowments and unit trusts, or building society and bank savings might have to simply grin and bear it. Stiff upper lip, old chap. It's a strange mixture: Its easy to borrow money, not too difficult to pay debts off using the right cards, property's gone through the roof but it's getting hard to get a decent return on investments.

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