Many people choose to invest in equities because there is a chance that they will give a better return than savings accounts. However, it is important to understand about them before you invest and know exactly what you are getting in to.
You need to consider the risk that you want to take. If you want a lower risk investment then you should invest in bonds and if are prepared to take a higher risk then shares could be for you. It is worth remembering that even the best stoke brokers cannot predict the stock market and so it is unlikely that you will beat them. You need to consider that any money you invest in stocks could be lost and possibly easily lost. However, if you have bonds, then you will not be taking this big risk.
The reason that people are prepared to take a risk is because they can get bigger returns. However, they are prepared to lose the money. This means you should only invest in something risky if you can afford to lose all the money. It might not seem possible, but it can happen and so you need to know that you can manage if it happens to you. You might feel that is worth it for the potential returns. Bonds will not have such a big return but you will be guaranteed to at least get back the money you put in. It is possible that you might get back less than inflation, so you may lose some value in the money, but you will not lose anything from the actual balance invested.
It can be more sensible to keep some money in safe bonds and risk some in stocks that might make a good return. It is up to you and often comes down to whether you have the sort of personality that likes taking risks or not. Think about how you would feel if you lost the money, but also think about how you would feel if you didn’t invest and could have made a lot of money. It can be a difficult decision to make as you have to balance the risk and decide. You can reduce the risk by researching the companies whose stocks you will be buying and think about whether you think they will do well, but this is not a sure fire way to ensure good results but it is more sensible than just buying random stocks without thinking.