Share Dealing For Long-Term Investment

18 June 2009 - Xenia Rainey (Which Way To Pay)


Share Dealing For Long-Term Investment

It’s the godfather of investment trading and has stayed a stalwart throughout the recent downturn: share dealing.  Ok, so it is not as new and exciting as some other investment tools – think of CFDs and Forex – but it does carry a good chance to get successful returns. 

Share Dealing – the traditional way to invest

For those traders looking for a high-risk, high-paced and action-packed form of investment, perhaps share dealing is not on top of the list.  But for those who are looking to widen their portfolio, spread risk and make a slow but steady investment, this trade type is ideal.

Nowadays, you can trade shares online but you can still employ the more traditional methods such as via the post or telephone.  Share dealing is straightforward: you buy a share in a company, you own that share and you receive a stake within the company.  The more shares you buy, the higher your stake.  You make gains through dividends.  The shares rise or fall in value, and so do your returns.

It All Lies in the Fees

Share dealing is, for want of a better term, the laid back way to invest.  That is to say, you can even choose a stockbroker who will buy and sell shares on your behalf.  The level of service you receive depends on how much you are willing to pay, and how much you want to be involved.  Some investors want to play their role and take a broker who simply provides a platform and the facility to trade.  Others seek a broker who will invest on their behalf using their expertise, or provide buy and sell signals and investment strategies along with plenty of training and advice.

Of course, there are transaction and commission fees which vary according to trade size and broker, but these are aside from the Admin and Service fees. 

How Risky is Share Dealing?

It may be a more calm way to invest than CFDs or financial spread betting, but of course share dealing carries risks.  As with any investment trade, it reacts to the volatility of the market.  When a recession is present, all share values go down.  But whereas derivatives trading relies on margin and carries risk of minute-to-minute fluctuations in values, share dealing allows for a long-term risk spread.  Your share may be down in value today, but if you have been strategic and analytical in choosing which shares to buy, then you may be confident that they will bring returns in the long run.

Of course you stand to lose the funds you invested, and of course you should only invest as much as you can afford to lose.  But share dealing can provide rewarding results and is certainly worth adding to your investment toolkit.


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