CHAPTER 4The benefits and risks of shares

All investments have pros and cons and since this book is principally about investing in the sharemarket, this chapter focuses on why people are attracted to shares and what they need to look out for.

Benefits

Let’s have a look at some of the benefits of share ownership.

Capital growth — making a profit

People invest in shares because they offer the potential of generating good returns if share prices rise. Investors may only intend holding the shares for a relatively short time or they may have a longer term view, but in either case they hope to make a profit.

There is a saying that you have never made a profit until you have sold, which is quite true. You might buy some shares and be in the happy ...

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