Investing in an investment company means buying its shares on the stock exchange. There are various ways to go about it.
- Investing with or without advice
- Investing via a wrapper scheme
- Regular savings
Investing with or without advice
- Investing with advice involves talking to a professional financial adviser, who will talk over your situation, needs and appropriate investments. Your adviser can help you decide if investment companies are right for you, and how to make your investment.
- If you invest without advice you’ll need to select your own investment company. You can either do this by buying your shares directly through a stockbroker or an execution-only dealing service, or you can invest via a wrapper scheme.
Wrapper schemes aren’t investments in themselves. Instead, they’re a way to buy and hold stocks and other investments, often without having to deal directly with a stockbroker. Often they offer tax breaks to encourage people to save and invest.
There are several different types of wrapper schemes. We give more detail on some of them here:
Instead of investing a lump sum you can choose to save regularly – as little as £20 per month.
Regular savings and investment schemes are an excellent way of reducing the risks of stock market investment. You can use them to put away a little each month, invest large sums gradually to smooth out stock market fluctuations or ease in to riskier investments.
One of the advantages of regular saving is known as ‘pound-cost averaging’. Buying some shares each month means you don’t need to worry too much about how the share price fluctuates – it’ll even out over the year. If you invest a lump sum you might be unlucky with the timing and buy when the shares are very expensive.