Equities

Equities are, quite simply, shares in companies. Income is received in the form of dividends that represent the distribution of a company’s profits. The price of shares will vary dependent on a number of factors, such as profitability, the position of the company within its sector and straightforward supply and demand. In a worse case scenario, the company will go into receivership and the share value can be wiped out. As you may well imagine, investing in larger companies carries less risk than investing in small companies, but the potential for profits is higher the other way round. Any risks attached to equity investment can be reduced by dispersing the investment over a range of different companies and by the use of professional managers. Examples of such collective investment schemes are Unit Trusts, OEICs and Investment Trusts, the suitability of which depends very much on the extent of your wealth and intended portfolio.

Historically, returns on equities, when viewed over the longer term, have been reliably greater than those earned from fixed interest investments.

Investment Warning:
Past performance is not necessarily a guide to the future and the value of units, and the income provided from them, can go down as well as up. You are not guaranteed to get back your original investment at any time.