Shares And Investment Trusts

Where from? Through a stockbroker or other share dealing service, through an investment adviser, or through new issues advertised in newspapers.

How they work You buy a stake in a company and become a part-owner of it along with all the other shareholders. The types of shares available range from shares in old-established companies to shares in very young companies, in different industries, even in different countries. You usually buy and sell in the hope of making a capital gain, though if share prices move against you, you could just as easily make a loss. Many shares also pay out regular dividends - usually twice a year which give you an immediate share in the company's profits.

Investment trusts are companies which don't carry on a normal business themselves but instead buy and sell the shares of other companies and make other investments. By buying the shares of an investment trust you can buy into a ready-made portfolio of a range of different shares and investments. Unless you have a lot of money to invest, this will be a cheaper and more feasible way of spreading your money and your risk across a range of different shares and investments.

Minimum investment In theory none. In practice, dealing costs are disproportionately high on purchases or sales below, say, £4,500. You can invest smaller amounts at lower cost in the shares of some investment trusts using special savings schemes that they run.

Maximum investment None.

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With-profits Insurance Policies

Where from? Life insurance companies, life insurance brokers and other investment advisers.

How they work There are different types of policy. With a regular premium plan, you invest monthly or annually, often for a set period (the 'endowment' period) such as ten years. At the end you get back a lump sum which is made up of a guaranteed sum plus bonuses which have been added. 'Reversionary' bonuses are added at intervals throughout the life of the plan, and a 'terminal' bonus is added when the plan matures. The proceeds of different plans vary enormously - the best performers can give you... see: With-profits Insurance Policies

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