Just as companies have different characteristics, so do investors. Some people buy shares because they want a regular income. Some people buy shares because they want to see their capital appreciate significantly. Some investors are extremely cautious; others prefer taking risks.
Before investing in shares, it is advisable to think about your own investment profile.
Over time, most shares will generate reasonable returns but different investors have different timeframes and the longer shares are held, the more opportunity they have to perform.
Most investors in shares are looking for a combination of income and capital gain. This can best be achieved through what is known as a diversified portfolio. Instead of buying one or two shares, investors buy a range of shares, each with different characteristics. These will include some large companies, some small; some from relatively safe sectors, some from higher growth areas.
If the right choice is made, this selection of shares can deliver capital growth, dividend income and a balance of risk and reward.
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