According to a recent industry survey, equity investments are back in favour and investors are returning to the markets. Many investors seem to have taken the view that the markets have turned and we have started a rising cycle. These investors are returning to the market to make the most of possibly undervalued stocks.
Our View
Over the past few months, the stock markets have been steadily rising and we would agree that consumers' confidence is rising, despite a number of minor setbacks. Equity investing is only suitable if you understand the risks you are taking. Simply, if you cannot afford to lose the money you have invested, do not invest.
Stocks and shares are very risky because you are exposing your money to one company. If you are unhappy with the risk this poses you should at least be spreading your money around many companies, sectors and markets. Directly investing in equities can also be bad for your wealth, in terms of taxation.
There are many ways to invest and for most of us, direct equity investment is not the most tax efficient way.