Risk

The more you have invested and the longer you can leave it alone, the more risk you can afford to take with some of it to achieve a higher reward. The most important thing is to recognise the existence of risk and to take appropriate steps.

Spread your

These are investments where the income is a fixed amount, at least for the time being. Usually the capital value is also fixed, although in some cases it can change, too. However, either income or capital are fixed and in many cases both.

Equities

These are investments in ordinary shares of companies, where both the income and the capital can vary up or down. They can be bought and sold on a stock exchange and they participate in profits (after any preference dividend is paid) and receive dividends, usually paid half yearly.

Shares have a par value usually ?1 or 50p but this bears no relationship to their market value and can be ignored.

Fixed interest versus equities

All statistics show that in the long run, due to capital growth, equities beat fixed interest by a big margin, whereas fixed interest may not even beat inflation

Here is another comparison. If you invested ?1,000 in 1973, 20 years later, in 1993, it would have grown to:

- building society (average) ?43,000
- shares (FTSE 100) ?297,000

Even after allowing for inflation, the equity investment would have risen to ?56,000, whereas the building society would not have kept pace with inflation and would have fallen to ?8,700.

Although the income on equities is less than on fixed interest to start with, it catches up and passes it in the long run. Over the past 30 years or so, income from equities has on average doubled every seven years

But to achieve the best returns on equities it is necessary to have flexibility in the timing of both buying and selling and an ability to remain invested for the long term say five years at least.

Risk

The more you have invested and the longer you can leave it alone, the more risk you can afford to take with some of it to achieve a higher reward. The most important thing is to recognise the existence of risk and to take appropriate steps.

Spread your i

Shares have a par value usually ?1 or 50p but this bears no relationship to their market value and can be ignored.

Fixed interest versus equities

All statistics show that in the long run, due to capital growth, equities beat fixed interest by a big margin, whereas fixed interest may not even beat inflation

Here is another comparison. If you invested ?1,000 in 1973, 20 years later, in 1993, it would have grown to:

- building society (average) ?43,000
- shares (FTSE 100) ?297,000

Even after allowing for inflation, the equity investment would have risen to ?56,000, whereas the building society would not have kept pace with inflation and would have fallen to ?8,700.

Although the income on equities is less than on fixed interest to start with, it catches up and passes it in the long run. Over the past 30 years or so, income from equities has on average doubled every seven years

But to achieve the best returns on equities it is necessary to have flexibility in the timing of both buying and selling and an ability to remain invested for the long term say five years at least.

Risk

The more you have invested and the longer you can leave it alone, the more risk you can afford to take with some of it to achieve a higher reward. The most important thing is to recognise the existence of risk and to take appropriate steps.

Spread your

Here is another comparison. If you invested ?1,000 in 1973, 20 years later, in 1993, it would have grown to:

- building society (average) ?43,000
- shares (FTSE 100) ?297,000

Even after allowing for inflation, the equity investment would have risen to ?56,000, whereas the building society would not have kept pace with inflation and would have fallen to ?8,700.

Although the income on equities is less than on fixed interest to start with, it catches up and passes it in the long run. Over the past 30 years or so, income from equities has on average doubled every seven years

But to achieve the best returns on equities it is necessary to have flexibility in the timing of both buying and selling and an ability to remain invested for the long term say five years at least.

Risk

The more you have invested and the longer you can leave it alone, the more risk you can afford to take with some of it to achieve a higher reward. The most important thing is to recognise the existence of risk and to take appropriate steps.

Spread your

Although the income on equities is less than on fixed interest to start with, it catches up and passes it in the long run. Over the past 30 years or so, income from equities has on average doubled every seven years

But to achieve the best returns on equities it is necessary to have flexibility in the timing of both buying and selling and an ability to remain invested for the long term say five years at least.

Risk

The more you have invested and the longer you can leave it alone, the more risk you can afford to take with some of it to achieve a higher reward. The most important thing is to recognise the existence of risk and to take appropriate steps.

Spread your

Risk

The more you have invested and the longer you can leave it alone, the more risk you can afford to take with some of it to achieve a higher reward. The most important thing is to recognise the existence of risk and to take appropriate steps.

Spread your investments over a number of different categories, having perhaps more than one investment in each category. Consider pooled investments such as unit trusts

In this connection, some advisers suggest that you should take into account your income from earnings (or from your pension if you are retired), which they capitalise and call your lifetime capital. The relative steadiness of this income can mean that you can take more risk with your investments.

Always look at the downside risk of each investment and decide whether you are happy with it. However, to achieve higher returns in the long run, you need to take some risk.

Shares have three opportunities/risks:

- the individual company,
- the market sector (such as stores, banks); and
- the overall market.

The volatility of individual shares has increased significantly in recent years and the potential to lose money is something like three times as great as 30 40 years ago. This applies in particular to shares in the FTSE 100 index (smaller companies are less volatile). In very recent times this increased volatility is due to the Internet linked companies.

Events in the lifecycle of shares

New issues

New shares sometimes come to the market as a result of de nationalisation and de mutualisation but any company coming to the market for the first time is a new issue. Application forms are printed in newspapers and are available on request. You fill in the form and send it off with a cheque.

You may not get all the shares you ask for. Some people apply for more than they ex