To get the most out of the stock market, you should be thinking about investing for the medium to long term, at least 5-10 years. If you can’t tie up your money for five or more years, a savings account is probably more appropriate for you.
All stock market investments can be risky. Some investments are much riskier than others. Generally the riskier an investment, the higher potential return you could receive. You need to decide what level of risk you’re comfortable with before you invest.
Remember, the value of shares and any income you receive from them will rise and fall with the market. There’s no guarantee you’ll get back what you put in. Levels of taxation can change and any tax advantages will depend on your own personal circumstances.
You also need to remember that although researching the stock market is essential, past performance is no guarantee of future success.
Most experts will tell you not to keep all your eggs in one basket. If you spread your investments over different sectors and markets, using a mix of funds and equities, this could help to reduce your risk.
If you’re thinking of investing, please remember that all stock market investments involve a degree of risk, and you might get back less than you invested. To make sure that you know all the facts before investing you can use our Shares Centre, Funds Centre, or Markets and Insights research centres for all the latest market news and charts.
Foreign markets will involve different risks to UK markets. In some cases the risks will be greater.
|Culture||Language and cultural differences between the UK and foreign markets may mean that there is a lack of information, or difficulty in obtaining information you may consider important to your trading decisions.|
|Currency Risks||When trading on foreign markets or in foreign denominated contracts, the potential profit or loss arising from such transactions can be affected by fluctuations in foreign exchange rates.|
|Economy and Politics||General economic and political factors such as inflation or fluctuations in interest rates within the UK may impact overseas markets. In addition, there may be no correlation between the general economic outlook and market conditions within the UK as compared to foreign markets. These may be less or more favourable.|
|Emerging Markets||Emerging markets tend to be less developed than the UK model and this can lead to greater volatility in securities pricing. This can mean the value of your investments may quickly change.|
As a shareholder who is resident in a different jurisdiction to that of the company you're invested in, you may find that you're excluded from certain shareholder rights and benefits. For example, the ability to participate in corporate events, such as Rights Issues.
This means that you might not receive the same treatment as other shareholders and you could suffer economic losses as a result.
Tax laws in other countries are different to those in the UK. In many countries the local tax authorities will withhold an amount of tax which exceeds the rate which would apply in the UK. In particular it’s worth remembering that ISAs and SIPPs will only shelter you from UK tax.
The treatment of tax is therefore likely to affect the value of and any returns you might expect from foreign investments.
|Trading and Settlement||Trading volumes in foreign markets can be smaller than those in the UK. This can mean that reduced liquidity in overseas markets makes it more difficult to sell shares you have bought. Delays in settlement may also occur.|
To help you mitigate stock market risk, we offer 5 TradePlans which can help you safeguard against unnecessary losses.
|Limit Order||A Limit Order lets you set a price above which you will not buy and below which you will not sell investments|
|Stop Loss*||A Stop Loss order lets you set a price to sell shares which is lower than the current price. It aims to protect you from falls in a share price.|
|Target Setting||Use Target Setting to maximise profit when share prices rise and protect against losses when they fall. This TradePlan is a combination of a Limit Order to sell at a higher price than the current price and a Stop Loss order to sell at a lower price than the current price.|
|Range Trading||Use Range Trading to specify the prices which you wish to buy and sell a particular stock without the need to constantly watch share prices. It's a combination of two Limit Orders, one to buy shares at a lower price than the current price, and one to sell them at a higher price.|
|Price Locking*||Use Price Locking to track a rising share price and protect you if the price begins to fall. It is an intuitive Stop Loss order that automatically adjusts your stop price to lock in rises when shares climb and protects you from sharp falls.|
*Important - Our Stop Loss and Price Locking facilities do not use a guaranteed stop loss. When the share price reaches your Stop Loss price, your order will go into a queue to be actioned. This means that the price dealt may, on occasion, be either higher or lower than the trigger price. Please note TradePlan is only available on CREST eligible UK investments.
You can set-up a TradePlan order online or over the phone. TradePlans cost £2 to set-up but if the trade executes, we'll reduce the dealing commission on that trade by £2. If you ever want to amend a TradePlan you can do this for £2. You can cancel a TradePlan at any time for no additional cost.
Setting up TradePlans on Self-Select Stocks & Shares ISAs and SIPPs is free of charge.