Investing in stocks is one approach to investing and it’s where you buy shares in a particular company or institution. People who trade on a stock market buy and sell shares in these companies. Generally speaking to invest in stocks you need an investment account.
If you’re new to investing and want to try investing in individual companies consider setting aside a small percentage of your portfolio and be prepared to see the value of those individual companies go up and down a lot over time.
In fact if a company goes bust you could lose all your investment in it. Although it can be more exciting to buy actual shares in a company you think might take off, the risks are much higher than having a diverse portfolio that has many stakes in a range of sectors, so if one were to drop the overall average would even out.
This is how investment funds and trusts work. They’re made up of many stocks and shares in multiple regions, industries and sectors. This means that if one area performs badly the others should make up for it over time.
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