Where Do I Buy Shares?

Where do I buy shares? Well the simple answer to that, is that shares are bought and sold on the Stock Market, through stockbrokers.

We go into more detail on stockbrokers on our How do I buy and sell shares? page.

So, why the Stock Market?

There is only one reason to save and invest, and that is to make money. Money that one day you will be able to spend on a new boat, a nice holiday or early retirement. The earlier you start, the more likely you are to get some great gains. But the size of that boat or the luxury of your holiday destination will depend on the return that you make from your investments. That much is obvious. But one thing is not so obvious. These are that historically the best returns come from the stock market. Not from gilts, corporate bonds or cash savings.

The Best Return Comes From the Stock Market

Let me introduce you to Professor Elroy Dimson. He is the foremost authority on the subject of stock market returns – and by the way this is not such a straightforward matter as you might think. Because of the changing composition of the stock market as companies come and go over time; because of taxation; and because your investment return comes from a combination of income (via dividend payments) and from capital appreciation (via rising share prices) the exercise of calculating an aggregate return from the stock market requires the brain of a statistician and plenty of hard work. Fortunately for us, Elroy Dimson has these qualities.

Every January Professor Dimson and his colleagues at the London Business School release their annual analysis of the penny share market.

They use an index called the Royal Bank of Scotland Hoare Govett Smaller Companies Index (HGSC) to monitor the performance of the UK’s penny shares. The index tracks the smallest 10% of the UK stock market by capitalisation. And the results are telling…

Over the full 56-year back-history, the RBS HGSC has beaten the annualised return on the FTSE All-Share by 3.4% per year.

In the words of the reports’ authors: “An investment in 1955 of GBP 1,000 in the HGSC, with dividends reinvested, would today be worth GBP 3.25 million, as compared to GBP 0.62 million with the FTSE All-Share.”

We go into shares in a lot more detail, giving you examples and taking you through an easy to follow, step by step guide into the exciting world of penny shares in our two starter handbooks - How To Buy & Sell Shares For Profit and How To Make Big Money In The Exciting World Of Penny Shares

And the best part is that you can receive these two guides absolutely FREE when you try Red Hot Penny Shares today.

We are offering you the chance of trying our service for one whole month, with no obligation. You will receive all of the following, which are yours to keep regardless of what you decide.

• An instantly downloadable copy of the latest issue
• A FREE book: How to Buy and Sell Shares For Profit
• A FREE book: How to Make Big Money in the Exciting World of Penny Shares
• A FREE report: Your 10 Simple Rules For Maximising Your Penny Share Profits

BUT if during your 1 month trial you decide Red Hot Penny Shares is not for you; simply call our customer service hotline on 020 7633 3601.

Here is just a small selection of other frequently asked questions that will be covered in full in our FREE handbooks.

What are shares?
Well, as their name suggests, if you hold shares you own a share of a company… Read more

What is a share price?
A broker who is dealing in shares doesn’t just quote one price for each share… Read more

How do I buy and sell shares?
When you want to buy and sell shares, you have to do this through a stockbroker. First of all, you’ll need to set up an account. This is easy… Read more

How much will buying and selling shares cost me?
Unfortunately there are charges involved in buying and selling shares… Read more

How much money do I need to start investing?
The first key point is that you should only invest spare money you can afford to lose… Read more

Sources:
Historically the best returns come from the stock market. Not from gilts, corporate bonds or cash savings: Barclays Capital Equity Gilt Study 2011

London Business School’s annual analysis of the penny share market: Motley Fool – The Easiest Way Ever to Buy UK Small Caps – 7 April 2011

RBS HGSC historical annualised return: RBS – A 2nd year of outstanding performance from mid- and small-cap companies – 13 January 2011