What are Shares?
Shares simply let us own a small slice of a company. If they do well, so do we. If they flop, we lose money.
Also known as stocks, or equities, shares exist to enable companies to raise money to fund their activity and growth. Individuals or companies buy shares, and give that company some money in return for ownership of a small piece of that business.
The thought process behind buying a share is no more complicated than what you see on Dragon's Den. You're the dragon trying to work out if you should invest in the company or not.
But buying a single share can actually be a risky way to access the stock market. Why? Well you're putting all your eggs in one basket.
We spoke to a lady who was horrified that she bought M&S shares and they went down. "I mean, it was M&S! They're really busy!" Just because it's a big brand which looks safe and solid, doesn't mean they are making decent profits that year or tracking to plan. Unless you really know what you're doing and can track analyst updates, we wouldn't advise your average Josephine to buy individual shares.
In a nutshell
• The FTSE 100 is simply the biggest 100 companies in the UK you can buy shares in
• Buying single shares is riskier than pooling your investments and buying a fund
• Online brokers typically charge about £8-£12 a pop to buy or sell shares