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It was correct at the time of publishing. Our views and any references to tax, investment and pension rules may have changed since then.
Lots of investors find researching shares a bit daunting, but if you’ve decided to consider investing in them, you have to start somewhere.
This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.
It was correct at the time of publishing. Our views and any references to tax, investment and pension rules may have changed since then.
We’ve broken down the process into four simple steps to help you get started.
Investing in individual companies isn't right for everyone – it's higher risk as your investment is dependent on the fate of that company. If a company fails, you risk losing your whole investment. You should make sure you understand the companies you're investing in, their specific risks, and make sure any shares you own are held as part of a diversified portfolio.
This is the most important part of the process. You should read through company updates on websites like that of the London Stock Exchange, watch daily news briefings and sign up to email alerts from companies themselves.
You don’t have to know everything. It would be impossible to read every piece of news, even on a slow day. Instead, focus on the industries, companies and markets you’re personally interested in.
Keeping up to date on political events around the world is also important as they can impact the way companies do business. Say, for example, the UK government decided to raise taxes on digital sales. This could make investing in an online retailer, whose costs will rise, a much riskier decision.
If you’d like to stay up to date with our latest views on investments, sign up for our ‘Share Research’ updates.
This is an extension of step one – we can’t overemphasise the importance of being informed. Once you’ve researched the companies you’re interested in, it’s time to look further afield.
News at competitor companies, issues with suppliers of raw materials, and changing costs of alternative products are just a few examples of what to look out for.
Another key tip is to think whether the news would matter to you if you ran the business. If so, read up on it. It’s nearly impossible to do too much research and anything that could impact the way a business operates might be important.
Financials like revenue, profit and cash are all important to consider. But there are lots of things that impact a business, its dividend payments and its share price. Here are some of the key metrics to think about when researching a company:
There are lots of different metrics that can impact whether or not you decide to invest in a company, and it’s important to consider the whole picture, not look at one or two in isolation. To learn more about how financial statements work and what to look out for, read our series on 'Understanding financial statements'.
Once you’re feeling confident with how the wider outlook for the company looks and the nitty gritty financials, you can start to think about actually investing. We try to clear out all the unnecessary facts from our writing, so it doesn’t get too complicated. You should try and do the same when making investment decisions.
It’s important to remember to check in on your investments from time-to-time to make sure they’re still right for you. There’s no hard-and-fast rule on how often you need to review your portfolio, but we think twice a year is sensible – once a year at the very least.
You should also check in when your circumstances or investment objectives change, or if there have been some big changes in the markets.
Hopefully this has given you some useful information that you can take away and apply to your own share research, as well as giving you a sneak peek into how we work. But if you’d rather we do some of the heavy lifting for you, sign up for our ‘Share Research’ updates. Remember though, there’s no substitute for your own research.
This article and our share research don’t give personal advice. If you're not sure if an investment is right for you, ask for advice. All investments can fall as well as rise in value, so you could get back less than you invest.
This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.
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