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It is most usual
to hold your shares electronically through a pooled
nominee account. You will retain beneficial ownership
of the shares.
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Many UK companies
pay dividends. Your online broker will put the twice-yearly
payout straight into your account.
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A rights issue
gives existing shareholders the right to buy new
shares. You should participate only if you feel
the company is commercially justified in it.
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A scrip issue is
when you are given free shares but the overall value
of your holding remains the same. It can give a
psychological boost to the share price.
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You can make money
trading on takeover speculation. But you need to
buy early and to sell out before the speculation
subsides.
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An ISA is a government-backed,
tax-efficient wrapper for your shares and/or other
investments.
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Diversification
is about reducing investment risk by not putting
all your eggs in one basket. About 14 stocks will
give you the maximum benefit across equities.
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Bonds are much
less risky than equities but, over the long term,
the returns are much lower.
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Commodities move
in the opposite direction to equities and bonds,
which makes them useful for diversification.
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Should you complain
to your stockbroker and fail to get a satisfactory
result, you have access to the Financial Ombudsman
Service.
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If an FSA-registered
stockbroker defaults, you have access to the Financial
Services Compensation Scheme.
