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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.
About the author
List of acronyms
1 The thrill of owning shares
Imagine being the owner of some great companies
How to become a millionaire
Returns over the decades
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
Capital gains (and losses)
Share buy-backs and special dividends
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
Choosing a stockbroker
Instructions and instructions
Ways of paying for your shares
Transferring shares without brokers
5 What happens once you have decided to trade?
Older ways of trading
So which system is best?
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)
7 Sifting out the important stuff on the internet
What the company puts out
Financial website navigation, step by step
8 Preference, foreign and golden shares
9 What drives share prices?
Business is business, regardless of scale
A multiplicity of factors
Inflation and interest rates
Export potential and currency shifts
Change in the industry
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
Chief executive’s review
Directors’ report and business review
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
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
Finding out about new issues
The role of the corporate broker
Methods of flotation
How does an AIM flotation differ from one on the Official List?
15 Seasoned equity offerings
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
Tax on dividends
Capital gains tax (CGT)
Individual savings accounts (ISAs)
Tax benefits of investing in AIM companies
Be a cheerful giver: get the taxman to give away money too!
18 Regulation of the markets
The Financial Conduct Authority (FCA)
Be reassured, but take precautions