Investing in equity involves purchasing shares or stocks of a company. You can buy and sell shares of companies that are publicly listed on the stock market. Some companies have privately held shares, which aren’t available for everyone to buy. When buying equity in a company, the investor becomes a shareholder and part-owner of the business.
Investors buy equity with the hopes that they will receive shareholder dividends and capital gains through the stock value rising . If the investment increases in value, you would receive the monetary difference when selling the shares.
Investing in stocks and shares is a hands-off investment, especially as investors typically use a stockbroker to manage their investments, but this also means investors doesn’t have as much control over this type of investment.
Volatility in the stock market
Investing in stocks is a high-risk form of investment. Additionally, investing larger amounts of money is typically the best way to try to reap rewards through stocks and shares. However, that means taking even more substantial risk.
The share price of a company changes depending on how the public feels about the business’s future prospects. The value of an equity investment can go up or down sharply. Recently, the stock market has been extremely volatile. And stocks and shares are expected to remain volatile as the UK navigates the uncertainty surrounding the coronavirus pandemic and Brexit.
Stock market projections
Coronavirus-related restrictions with two national lockdowns and other guidelines that have negatively impacted many businesses during 2020 has also strongly impacted the stock market this year. While there has been unprecedented government support to help businesses and workers, many companies are still struggling and will continue to do so while there are tight lockdown restrictions and social distancing measures in place.
Economists are expecting Britain to plunge into a double-dip recession as more stringent restrictions will likely harm the country’s fragile economic recovery. The uncertainty will continue to impact the stock market in the coming weeks and months, and the economy and stock market could be impacted for years to come.
These conditions are forecast to make investing in stocks much less profitable for some time and will likely be too risky of an investment for many as we navigate the current recession, struggling job market and the coronavirus pandemic.
It’s recommended to receive professional financial advice when considering any kind of investment to ensure you find the best investment option for you.