Interest Rates And Interest Rate Risks

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Interest Rate Risks

The rate of interest that banks set has a big influence on businesses, and so it will affect your shares too. For example, it may affect savings rates and mortgage rates, which may affects companies that rely on insurance companies, or companies that have mortgages on their property. Even bonds, which are fairly safe investments, are affected because interest rates may make them harder to sell in the free market, meaning you have to keep your money invested in them until their term finishes. Interest rates may have a big impact on the companies you buy stock in, which means they may have an effect on your future wealth and the growth of your portfolio (your portfolio is just another name for your catalog of shares that you hold with different companies).

Not to labor the point, but interest rates may affect how consumers spend money, which means the companies you have invested in may have less customers for a while, which will negatively effect your share prices and may even result in the company going bankrupt.

Market Risk

This is a case of supply and demand at its core. If customers suddenly decide they do not need the products that the company you invested in produces, then they will stop buying and your shares will decrease in value and/or the company will go bust and you will lose your investment.

Supply and demand affects your share price too. If lots of people want the same shares as you, then their price will go up. A company that suddenly gains a lot of attention will often see its share price increase. On the other hand, if you watch share prices, you will often see that a share price goes down when there are large sales of the stock. This is because of supply and demand; when there are mo...

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...you need to invest in a company that is financially sound and growing. It has to offer products or services that consumers want and/or like, need and demand. It should also be in a strong and growing industry, and ideally within a strong and growing economy.

There are tutorials and glossaries online that will help you understand different words and specific elements to investing and investing strategies, but in its simplest form, you are buying shares and selling shares as if you were buying and selling postage stamps.

You should check the news for information that may be relevant to your company, which means doing more than searching for information on the company you want to buy shares of. Look up industry news, especially relating to your company’s competition. Look up previous share prices and track your share selections to ensure you sell at the right time.

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