Investing in Stocks

When you invest in a company’s shares (aka stocks), you are buying a small stake in that company. This purchase makes you a shareholder in a public company. A public company is owned by its shareholders, and each share available in the market represents a claim on that company’s assets and earnings.

(Not all companies are publicly available for investors. Many companies, including some very large companies, are private. This means that the average person cannot invest in them.)

As an investor, you can buy shares in many different kinds of companies operating in different sectors. There are large companies (sometimes called large-cap companies) that are worth billions upon billions of pounds. There are also mid-sized companies and smaller companies (sometimes called mid-cap and small-cap companies).

In general, over the long term, investing in stocks (aka equity) helps people grow their investments. Individuals buy shares in public companies in the hopes that their money will grow over time. However, investing in shares comes with risks. While investors hope a company will grow, which will hopefully lead their investments to grow, sometimes companies can stumble upon hard times. Shares can drop in value and investors can lose money. That is why it is important to conduct thorough research before making an equity investment.

Morningstar offers research and tools to help investors find suitable equity investments. You can start by finding the latest equity research and information in the Equities section on Morningstar.co.uk. You can find equities articles here. Also, Premium members have exclusive access to in-depth Morningstar equity reports. 

Exchanges

Public companies are traded on exchanges around the world. In the UK, public companies are traded on the London Stock Exchange. In the US, major public companies are traded on the New York Stock Exchange and the NASDAQ.

The FTSE 100 is an index that tracks the 100 largest companies that are traded on the London Stock Exchange. These are all considered to be large-cap companies because they have large market capitalisations. As the name would imply, the FTSE 350 index tracks the largest 350 companies that are traded on the London Stock Exchange. This includes the companies on the FTSE 100.

Further Reading

- Money & Investment Basics

- The Basics of Equity Investing

- What is an ETF?

- What is a Fund?

- What is an Investment Trust?

- Bond Basics Video Series

Morningstar is one of the largest independent sources for equity and credit research in the world, boasting roughly 100 equity and credit analysts. Our analysts evaluate companies using a proprietary methodology built on fundamental analysis that scrutinises a company’s sustainable competitive advantages. This helps investors find the best companies for their portfolios.