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What should I understand before I invest?
Ownership, funds, portfolios, costs and the role of time before individual product choices.
- 01Investing basics · beginnerRead guide
What is a stock or share?
A share is a small piece of ownership in a company. A stock is the same basic idea, especially in American usage.
- 02Investing basics · beginnerRead guide
Stocks
Stocks are the asset class made up of tradable company shares. The plural describes many possible ownership interests rather than the single ownership unit explained by a share.
- 03Investing basics · beginnerRead guide
Bonds
A bond is a tradable loan to a government, company or other issuer. The issuer promises specified payments, but the value and reliability of those promises can change.
- 04Investing basics · beginnerRead guide
Exchange-traded funds
An exchange-traded fund, or ETF, is a pooled portfolio whose shares trade on an exchange. What it owns and how it follows its stated approach determine the real exposure.
- 05Investing basics · beginnerRead guide
Mutual funds
A mutual fund pools investors' money into a shared portfolio managed under stated rules. Investors usually transact with the fund at a calculated net asset value rather than trading continuously on an exchange.
- 06Investing basics · beginnerRead guide
Index funds
An index fund aims to follow a defined index rather than selecting investments through discretionary forecasts. Its result should be judged against that index after costs and implementation differences.
- 07Investing basics · beginnerRead guide
Active and passive investing
Active investing makes discretionary choices in an attempt to improve on a reference point; passive investing follows a predefined index or rule. Both still involve objectives, costs and implementation choices.
- 08Investing basics · beginnerRead guide
Dividends
A dividend is a distribution a company chooses to make to eligible shareholders, usually from available cash. It transfers value out of the company and is not an extra return created from nothing.
- 09Investing basics · beginnerRead guide
Compound returns
Compounding means later gains or losses apply to a value already changed by earlier returns. Reinvested growth can build on growth, while repeated losses shrink the base available to recover.
- 10Investing basics · beginnerRead guide
Capital gains and losses
A capital gain or loss is the change between an asset's relevant purchase cost and its disposal value. It becomes realised when the asset is sold under the applicable accounting or tax convention.
- 11Investing basics · beginnerRead guide
Income and growth investing
Income investing emphasises cash distributions; growth investing emphasises businesses expected to increase future earnings or value. Most investments contain some mixture, and total return counts both.
- 12Investing basics · beginnerRead guide
What is a portfolio?
A portfolio is the complete set of investments and cash considered together. Its behaviour depends on each holding's weight and on how the holdings move in relation to one another.
- 13Investing basics · beginnerRead guide
Asset allocation
Asset allocation is the decision about how much of a portfolio belongs in broad exposure groups such as shares, bonds and cash. It sets the portfolio's main sources of risk and return.
- 14Investing basics · intermediateRead guide
Portfolio rebalancing
Rebalancing returns a portfolio towards its intended allocation after market moves or cash flows change the weights. It is a risk-control process, not a promise to improve returns.
- 15Investing basics · beginnerRead guide
Regular investing
Regular investing contributes set amounts over time, buying more units when prices are lower and fewer when prices are higher. It disciplines timing but does not ensure a profit.
- 16Investing basics · beginnerRead guide
Lump-sum investing
Lump-sum investing puts available capital to work at one time rather than staging entry. It gains immediate market exposure and accepts the risk of an unfavourable starting point.
- 17Investing basics · beginnerRead guide
Investment time horizon
An investment horizon is the time until money may need to serve its purpose. It helps determine which losses, volatility and lack of liquidity can realistically be tolerated.
- 18Investing basics · beginnerRead guide
Risk tolerance
Risk tolerance is a person's willingness to live with uncertain outcomes and losses. It is psychological and distinct from the financial capacity to absorb those losses.
- 19Investing basics · beginnerRead guide
Investment objectives
An investment objective states the job money is meant to do, such as preserving purchasing power, providing income or funding future spending. It should guide risk and measurement choices.
- 20Investing basics · beginnerRead guide
Investment fees and costs
Investment costs are amounts removed through product charges, advice, trading, tax and implementation. Because they reduce the capital left invested, recurring costs also compound through time.
- 21Investing basics · beginnerRead guide
Fund expense ratios
A fund expense ratio expresses recurring operating expenses as a percentage of fund assets. It is taken within the fund and reduces the return investors receive rather than arriving as a separate bill.
- 22Investing basics · beginnerRead guide
Brokerage accounts
A brokerage account is an arrangement through which a provider holds cash and investments and carries out market transactions for a customer. The account wrapper, protections and permissions matter.
- 23Investing basics · beginnerRead guide
Stocks and shares ISAs
A stocks and shares ISA is a UK tax wrapper that can hold eligible investments. The wrapper changes specified UK tax treatment; it does not change the risk or return of what is held.
- 24Investing basics · beginnerRead guide
Pensions and long-term investing
A pension is a long-term arrangement designed to fund later life, often combining contributions, tax rules and invested assets. Its benefits and access conditions depend on the specific scheme and law.
- 25Investing basics · beginnerRead guide
Cash saving versus investing
Cash prioritises nominal stability and access; investing accepts uncertain values in pursuit of income or growth. The relevant comparison includes purpose, horizon, inflation, risk and liquidity.
- 26Investing basics · intermediateRead guide
Real and nominal returns
Nominal return is the change measured in money; real return adjusts for inflation to show the change in purchasing power. The exact relationship compounds rather than simply subtracting large rates.
- 27Markets & trading · beginnerRead guide
What is the bid/ask spread?
The bid is the best current buying price. The ask is the best current selling price. The gap is the spread.
- 28Markets & trading · beginnerRead guide
Market orders
A market order prioritises execution against available prices rather than setting a maximum purchase or minimum sale price. It is an instruction to trade, not a guarantee of the last quoted price.
- 29Markets & trading · beginnerRead guide
Limit orders
A limit order sets the worst price the trader will accept: no more than the limit when buying and no less when selling. Price control is gained by accepting execution uncertainty.
- 30Markets & trading · intermediateRead guide
Stop and stop-limit orders
A stop order activates after a trigger price is reached; a stop-limit then submits a limit order instead of an unrestricted market order. Triggering and execution are separate events.
- 31Markets & trading · beginnerRead guide
Market liquidity
Market liquidity is the ability to trade a useful quantity promptly without moving the price greatly. It depends on size, cost, speed and current market conditions.
- 32Markets & trading · beginnerRead guide
Trading volume
Trading volume is the quantity of shares, contracts or units exchanged during a defined period. It measures activity, not whether buying or selling pressure was correct.
- 33Markets & trading · intermediateRead guide
Market depth
Market depth is the quantity available to buy or sell across multiple price levels in an order book. It shows more than the best bid and ask but remains a changing snapshot.
- 34Markets & trading · beginnerRead guide
Pre-market trading
Pre-market trading occurs before an exchange's main regular session under specific venue and broker rules. Participation and liquidity are often lower than during normal hours.
- 35Markets & trading · beginnerRead guide
After-hours trading
After-hours trading occurs after the regular session closes under extended-hours rules. It can process new information while offering less depth and wider spreads.
- 36Markets & trading · beginnerRead guide
The trading session
A trading session is a defined period during which a venue accepts and matches eligible orders. Opening, continuous, auction and extended phases can use different rules.
- 37Markets & trading · intermediateRead guide
Before market open and after market close
BMO means before market open. AMC means after market close. The label tells you which regular session first had the news.
- 38Markets & trading · beginnerRead guide
The market open and close
The market open and close are rule-based transition points, often set through auctions that combine orders into a single clearing price. They are not merely the first and last random trades.
- 39Markets & trading · beginnerRead guide
Market indices
A market index is a rules-based measure of a selected group of securities. Its constituents, weights and calculation method determine what its movement represents.
- 40Markets & trading · beginnerRead guide
Sectors and industries
Sectors and industries group companies by related economic activity. The hierarchy helps comparison, but classification systems and diversified businesses create imperfect boundaries.
- 41Markets & trading · beginnerRead guide
Bull and bear markets
Bull and bear markets are informal labels for substantial rising or falling market phases. Thresholds and start dates vary, so the label must be tied to an index and convention.
- 42Markets & trading · intermediateRead guide
Short selling
Short selling usually borrows an asset, sells it, and later buys it back to return the borrowed units. The position gains if the repurchase cost is lower, before fees and other obligations.
- 43Markets & trading · intermediateRead guide
Options basics
An option is a time-limited contract giving its buyer a right, but not an obligation, under defined terms. Calls relate to buying the underlying; puts relate to selling it.
- 44Markets & trading · intermediateRead guide
Futures basics
A futures contract is a standardised agreement to exchange or financially settle an underlying exposure at a future date. Both sides carry obligations and post margin.
- 45Markets & trading · beginnerRead guide
Initial public offerings
An initial public offering, or IPO, is the first broad public sale and listing of a company's shares under a formal offering process. It creates public price discovery and disclosure obligations.
- 46Markets & trading · intermediateRead guide
Secondary share offerings
A secondary share offering sells additional shares after a company is already public. It may raise new company capital, sell existing holders' shares, or combine both.
- 47Markets & trading · intermediateRead guide
Market makers
A market maker regularly quotes prices at which it is prepared to buy and sell under venue or commercial arrangements. It supports immediacy while managing inventory and information risk.
- 48Markets & trading · intermediateRead guide
Price discovery
Price discovery is the process through which orders and trades combine dispersed information, needs and constraints into market prices. It is continuous and can be noisy or temporarily impaired.
- 49Markets & trading · intermediateRead guide
Trading slippage
Slippage is the difference between a reference price and the price actually achieved, under a stated sign convention. It reflects market movement, spread, depth, latency and order design.
- 50Markets & trading · beginnerRead guide
Transaction costs
Transaction costs are the explicit and implicit costs of entering, changing or exiting a position. They include fees, taxes, spread, market impact and sometimes financing or currency conversion.
- 51Markets & trading · intermediateRead guide
Volatility halts and circuit breakers
A volatility halt or circuit breaker pauses or constrains trading when defined conditions are met. It creates time for orders and information to regroup; it does not fix a price.
- 52Markets & trading · beginnerRead guide
Trade settlement
Trade settlement is the completion stage when securities and cash are delivered under market rules. The trade is agreed first; legal and operational completion follows on the settlement schedule.
- 53Markets & trading · beginnerRead guide
Corporate actions
Corporate actions are company events that change securities, cash entitlements or ownership terms. They can be mandatory, voluntary or offer choices to eligible holders.
- 54Markets & trading · beginnerRead guide
The ex-dividend date
The ex-dividend date is the first date a purchase normally no longer carries the right to a declared dividend under the market's settlement rules. Eligibility depends on the official timetable.
- 55Markets & trading · beginnerRead guide
Record and payment dates
The record date is when the issuer checks its ownership records for an entitlement; the payment date is when cash or securities are distributed. Trading settlement links eligibility to earlier dates.
- 56Markets & trading · beginnerRead guide
Ticker symbols
A ticker symbol is a venue-specific short identifier for a security. It is convenient for display but not globally unique and can change or be reused.
- 57Markets & trading · beginnerRead guide
Primary and secondary markets
The primary market creates and sells new securities to raise capital; the secondary market lets investors trade existing securities with one another. The cash recipient differs between them.
- 58Markets & trading · intermediateRead guide
Exchange-traded and over-the-counter markets
Exchange-traded markets use a central venue and standard rules; over-the-counter markets involve dealer or bilateral networks. Transparency, standardisation and counterparty arrangements differ.