Most stocks are traded on exchanges, which are places where buyers and sellers meet and decide on a price.
The purpose of a stock market is to facilitate the exchange of securities between buyers and sellers.
Some exchanges are physical locations where transactions are carried out on a trading floor. You’ve probably seen photographs of a trading floor, in which traders are wildly throwing their arms up, waving, yelling, and signalling to each other.
The other type of exchange is virtual, composed of a network of computers where trades are made electronically.
The London Stock Exchange
The London Stock Exchange (LSE) is a stock exchange in the City of London, England (you will find it at Paternoster Square, close to St Paul’s Cathedral).
As of November 2021, the total market value of all companies trading on LSE was £3.9 trillion.
Since 2007, the London Stock Exchange has been part of the London Stock Exchange Group (LSEG). You can find the LSEG listed on the London Stock Exchange.
- Invest in approximately 20 to 30 stocks in at least six to eight sectors with different investment characteristics.
- No more than 20% of the total value of your stock portfolio should be in any one sector.
- No more than 10% of the total value of your stock portfolio should be in any one stock.
- You should invest a minimum of approximately 3% to 4% of the total value of your stock portfolio in each stock.
Deciding which stocks to invest in can be difficult, especially if you have a low tolerance for risk. That’s why it’s important to define one’s financial goals and how much risk can be tolerated. Research stocks that fit within your strategy and invest in stocks that have the potential to help you meet your specific goals, whether you want investment growth, income, or a combination of the two.
Your authorised financial adviser can provide you with a wide range of stock investing services, including:
- Asset allocation strategy development
- Individual stock selection
- Help in deciding when to buy and sell your stocks