IFA Exeter
Financial Blog   Investor Access
Home » IFA Exmouth  
Sipps Pensions

Shares or should we say equities?

Shares, also known as equities, represent your ownership of a proportion of a company. When a company is set up it can be created by one or more persons. If a company is totally owned by one person you could get away with just one share, however it is more common for a larger number of shares to be issued when the company is set up. Should the company then wish to raise some capital in the future to help develop its business, it could sell some of the shares to new investors rather than incur lending costs. This is sometimes achieved by an initial public offering (IPO), where some of the shares are offered for sale on a stock exchange. Traditionally shares were held in certificated form, however, large company shares are a valuable commodity owned and frequently traded by individuals and investment companies. Therefore today, they are usually held electronically. Owning a share of a company generally gives you the right to vote on company matters including the appointment of the Board. Naturally, your influence at these votes will be limited to the proportion of the company that you own. Other potential benefits that you receive from holding shares, include potential capital growth, which historically over the long term has beaten all other asset classes and inflation as well as providing, in some cases, an income in the form of dividends.

Most of the tradable stocks are bought and sold on a stock exchange. Some of the most well-known ones are the London Stock Exchange (LSE) and the New York Stock Exchange (NYSE). In fact, many countries have their own stock exchange to buy and sell their domestic companies shares. However, some companies prefer to be on a larger and more accessible exchange to access investments from global foreign investors. Raymond James Investment Services provide their offices with access to 25+ stock exchanges globally.

The number of shares in circulation multiplied by the share price gives you the total value of the company; this is known as the market capitalisation (market cap). The market cap represents what the company would cost, if it was sold. Like anything you try to sell, its value will depend on a number of factors, like quality, desirability and of course demand. If the company does well, its rise in value is reflected in its share price, so increasing the shareholders’ value. Similarly, if it performs poorly, the share price can also fall. Even an out-of-favour company can suddenly become more valuable if someone shows an interest in buying it. Raymond James Exeter and Cheltenham Branches assist their clients when an equity owned by you is subject to takeover or a merger with another firm.

Use the ‘contact us’ page to ask how we can help you with takeovers and mergers.


Besides the potential for inflation beating capital growth a well performing company can share some of their profits with its shareholders in the form of an income called dividends. The Invest Together Investment Committee research a broad range of UK, European and US equities. The central theme looks for firms with a track record for increasing their dividends. These rising dividends can help our clients maintain their standard of living in retirement, when a greater pressure is exerted on their slowly devaluing incomes.

There are also some tax advantages in holding shares in that the capital growth is only realised on selling and the annual capital gains tax (CGT) allowance can be used to offset against this. The dividends paid are net of basic rate tax and so unless you are a higher rate tax payer; there is no further tax to pay.

In addition to this, many shares are able to be held within Individual Savings Account (ISAs) and Self Invested Personal Pensions (SIPPs). In August 2013, the UK Government also allowed many smaller Companies listed on the Alternative Investment Market (AIM) to be included in ISAs. This means that any capital growth is free of tax and there is no income tax at a higher rate; however, the dividend tax credit cannot be reclaimed.

Shares and fixed interest bonds are the most basic form of investment. Nearly all financial products mimic, replicate or contain a diverse range of equities and bonds to ‘reduce risk’. Commentators regularly jump on the risks of being exposed to only one company. However, these more complex forms of investment may also come with greater costs; with the owner not always clear as to what they are really exposed to. In our experience owning a few quality shares as part of a well-diversified portfolio can assist investors with gaining a better understanding of investing generally.

If this is something you are interested in or even if you already own shares and need advice, please use the ‘contact us’ page to find out how we can help you.

Invest Together
For your future
For income
In Retirement
For long term care
For estate planning
Investment proposition
About us
Contact us
Financial Advisor Exeter
Independent Financial Advisor Exeter Independent Financial Advisor Exeter
Contact our offices for investment advice and planning
Exeter Offices | Tel: 01404 598 373
Briar House, Clyst Honiton, Exeter, Devon, EX5 2LZ
Cheltenham Offices | Tel: 01242 807 455
6 Bath Mews, Bath Parade, Cheltenham, GL53 7HL
Colyton Offices | Tel: 01297578460 
The Mews, Queens Street, Colyton, Devon, EX24 6JU
Exmouth Offices | Tel: 01395 542 551 
32 Rolle Street, Exmouth, Devon EX8 2SH

Raymond James Investment Services Limited is a member of the London Stock Exchange and
is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales No. 3779657. Registered office: Broadwalk House 5 Appold Street London EC2A2AG. | RAYMOND JAMES is a registered trademark of Raymond James Financial, Inc. | Legal Disclosures
Devon Web Design | Web marketing & Design