Get Started in Shares

Investing can be fun as well as rewarding. It could certainly earn you much more than you could gain by sticking your money in a bank account. It really does not require much to make money from the stock market - just an understanding of a few simple concepts and the following of a few rules. Written by the UK's most successful writer on investing, Get Started in Shares explains in very clear and simple terms what shares are, how they are traded and what to look out for as an owner of shares. This is a straight-talking guide to the mysteries of investing that assumes no prior knowledge and will build up your understanding of investing in a series of easy steps.Acknowledgements About the author List of acronyms Preface 1 The thrill of owning shares Imagine being the owner of some great companies How to become a millionaire Returns over the decades International comparison Comparing the returns on other investments 2 Businesses and shares What is a share? Why do we need shares? Partnerships and liability Directors are not the same as owners Some more on ordinary shares It's easy to create shares Authorised, issued and par values Public, private and listed No right to vote Parents and groups Primary versus secondary markets 3 What you receive from the company A flow of cash income How much is paid? When do I get paid? Downloading data on dividends for a company Dividend yield Capital gains (and losses) Share buy-backs and special dividends Perks 4 What do stockbrokers do? They are not posh anymore Types of broker Setting things up with a broker Execution-only (or dealing-only) service Advisory dealing service Discretionary service Choosing a stockbroker Instructions and instructions Ways of paying for your shares Internet dealing Transferring shares without brokers 5 What happens once you have decided to trade? Older ways of trading Quote-driven trading Order-driven trading So which system is best? Clearing Settlement Alternatives to SETS in London After the deal The advanced stuff - direct market access 6 What do stock markets do? A worldwide phenomenon Shifts in stock exchanges A fair market The main benefits of a well-run stock exchange The London Stock Exchange (LSE) The London Stock Exchange primary market The secondary markets The Alternative Investment Market (AIM) PLUS 7 Sifting out the important stuff on the internet What the company puts out Newspaper websites Financial websites Financial website navigation, step by step Director's dealings Trading online 8 Preference, foreign and golden shares Preference shares Overseas shares Golden shares 9 What drives share prices? Business is business, regardless of scale A multiplicity of factors Economic growth Inflation and interest rates Export potential and currency shifts Change in the industry Government actions Social trends The anticipation machine Don't do the following 10 Assessing a company Investors versus speculators Assessing an industry Competitive resource analysis The TRRACK system Quality of management 11 Profits and balance sheets The future is the focus, the past gives us clues Profit and loss account Balance sheet Chairman's statement Chief executive's review Directors' report and business review Auditor's report Five-year summary Trading statements 12 Cash flow and key ratios Cash flow statement Key ratios and measures 13 Measuring risk The greatest risk of all Diversification - the nearest thing to a free lunch in investing Volatility Correlation Beta and alpha Some more types of risk Great investors' views on risk 14 Companies selling shares to outsiders Can be good, but be cautious The sponsor The prospectus Finding out about new issues Underwriting The role of the corporate broker Methods of flotation How does an AIM flotation differ from one on the Official List? After flotation 15 Seasoned equity offerings Rights issues Illustration of a rights issue Other equity issues Splits and consolidations 16 Stock market indices How are indices calculated? The major UK market indices Venturing abroad - international indices Other important indices 17 Taxation Stamp duty Tax on dividends Capital gains tax (CGT) Individual savings accounts (ISAs) Personal pensions Tax benefits of investing in AIM companies Be a cheerful giver: get the taxman to give away money too! 18 Regulation of the markets Scams UK regulation The Financial Conduct Authority (FCA) Be reassured, but take precautions Notes Index