To a beginner, the stock market can stock market companies to invest in rather daunting. But equities outperform cash and bonds over most medium and long-term periods and easy routes in are not hard to find. In reality, with dismal returns on offer from banks and building societies, investing in shares provides an opportunity to hedge against rising inflation and achieve greater returns than cash, bonds and property. Shares versus cash: which has made the best returns since 1995?
The basics of investing In the UK, the main stock market is the London Stock Exchange, where public limited companies and other financial instruments such as government bonds and derivatives can be bought and sold. The stock market is split into different indices – the most famous in the UK being the FTSE 100, comprising the largest 100 companies. There are two ways to access the stock market: directly and indirectly. Although ‘directly’ is a misnomer – investing in the stock market is always done through a third-party broker – direct investment means buying the shares in a single company and becoming a shareholder.