Shares, Stocks, Equity – What are they? Where do they come from?!

This is the first blog, that will start to look into a building block of Asset Allocation in more detail. This will be exciting series that will cover bonds, equity, alternatives, funds, etc.

Please keep in mind that blog is about investing and not trading. We aim to buy low (or when the price is going down) and sell high (or when the price is going up). Opposite to trading, where you buy when the price increase and sell when the price goes down.

From previous blogs, you may have decided, how much you would like to invest in stock, but before you start, we should understand these a little better.

You may have heard before that when you buy a share, you buy part of the company. Easy to remember, no? Of course, it is a quite small part in the beginning. But why do companies sell their shares? Well,  it is all to do with the capital structure of the company, they do not want to take more debt and could raise funds by offering part of the company to the public. This is also what is called IPS (Initial public offering). Companies’ usually use funds for expansion or paying back some debt. In UK, companies are broadly classed as Limited (Ltd) or Public (PLC). Both can sell shares to investors, but as retail investors, we are interested in PLCs, these companies offer their share via the stock exchange, which is called London Stock Exchange. For the reader, who is not in  UK structures are still very similar.

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Simple and Sustainable Asset Allocation solution in just 5x6min videos!

Introduction:

After I have created my blog and started writing about investment, I, also, started investigated what else is available on the internet. Pages like Investopedia, which is a great source. Also, I come about the same name book as my blog, with some great short videos from the author. Therefore, I have decided to share these with you.

Have fun watching. This will help you better understand subjects we will review in the future blogs. Also, keep your mind open there isn’t just one investment strategy. Continue reading →