How investing in shares works in practice
When you invest in shares, you buy stakes in a company via a broker or bank. The share price is determined by supply and demand in the market, and you can choose to sell at any time if you find a buyer and the market price matches your goals.
Regular dividends from some shares can give you a return while you own them, while other shares pay no dividend but are expected to increase in value.
Common things to consider when investing in shares
Here are some factors to keep in mind when building your share portfolio.
- Set goals for how long you will own shares
- Decide what level of risk you are comfortable with
- Spread investments across several companies or sectors
- Keep track of brokerage fees (courtage) and other charges
- Review your investments regularly
When you take these factors into account, it becomes easier to make well-founded decisions and create a plan that helps you keep your focus on the long term.
What you need to know before you start investing in shares
Worth bearing in mind
Before you buy shares, it is important to have a plan for why you are investing, how long you intend to save and how much risk you are prepared to take. The stock market can both rise and fall, and even though historical returns have often been positive over the long term, you need to be prepared for short-term fluctuations.
Spreading risk and having realistic goals helps you deal with uncertainty and stick to your strategy even when the market is volatile.
Frequently asked questions
How do you make money from shares?
Through a rise in the share's value or through dividends that the company pays out to its owners.
Is investing in shares risky?
Yes. Shares can both increase and decrease in value. The level of risk varies between companies, sectors and market conditions.
How much should I invest?
It depends on your finances and time horizon. Only invest money you can leave invested for the long term and whose value you can afford to see fluctuate.
Do I have to understand financial statements to invest?
Not always, but a basic understanding of the company's finances, growth and profitability helps you make better choices.
Can I invest in unlisted shares?
Yes. It can give access to companies at earlier stages, but trading happens less often and requires more analysis of valuation and terms.