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M&G Spin-Free Guides – What are equities?

??? ££, Depending on the level of risk you're willing to take, equities could be right for you. This guide should help you think about how to invest and potentially grow your money. What are equities? A company can raise money to invest or expand by splitting its ownership into shares (also known as equities) and selling them to investors. The investors become shareholders, partial owners of the company. They could receive a percentage share in its profits and may have the right to vote on how the company is run. What drives their value up or down? SHORT TERM LONG TERM NEWS Company factors Economic factors External events Profitability like business like exchange such as of the business, both performance and industry past and future forecasts rates, interest terrorism, wars, rates and political events, news inflation natural disasters More investors want to buy but More shareholders want to sell fewer shareholders want to sell but fewer investors want to buy VALUE INCREASES VALUE DECREASES How do you make money from equities? Income: receive dividends Capital growth You'll make money if you sell your shares at a higher price than you bought them. The company decides how much profit to pay in dividends and how much to reinvest. The value of stock market investments will fluctuate, which will cause share prices to fall as well as rise and you may not get back the original amount you invested. The level of any income earned will fluctuate. A case for equities RISK RISK SK LOW HIGH LOW HIGH LOW HIGH LOW HIGH LOW HIGH I EB HIGH HIGH LOW HIGH LOW LOW RETURN TUR RETURN RETUR Cash savings onds Equities Property Will I receive an income? Not guaranteed, dependent on the dividend and will Low, in line with Generally higher, stable income. Generally higher, can fluctuate but interest rates. Usually fixed. should remain fluctuate. stable. Is my initial investment secure? Up to £85,000 protected in a bank or building society. Not secure and may fluctuate sharply. Not secure but Not secure but generally safer than equities. generally safer than equities. Will my Low growth. You could lose money if investment grow? the interest rate is Some growth potential. High growth potential. Some growth potential. less than inflation. What is an equity fund? Invest through a managed fund and you won't An experienced fund manager invests and invest alone - manages on your behalf. An active you'll pool your money with other investors to buy manager aims to beat the returns equities. from the stock FUND market. We are unable to give financial advice. If you are unsure about the suitability of your investment, speak to your financial adviser. INVESTMENTS Issued by M&G Securities Limited which is authorised and regulated by the Financial Conduct Authority in the UK and provides investment products. The registered office is Laurence Pountney Hill, London EC4R OHH. Registered in England No. 90776

M&G Spin-Free Guides – What are equities?

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The second of five infographic guides breaking down different types of investments, made at Guardian Digital Agency.

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