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Money: Share in wealth from stocks

More and more people are putting a toe into the stock exchange waters, whether through having a stake in a former building society or a privat ised utility such as BT. So far so good, but how best to proceed? In this surve y we plot a course for such budding investors
The number of individual shareholders in the United Kingdom has probably doubled in the last year following the rash of free share handouts by building societies and insurers. The stock market, it seems, is less and less out of reach.

Indeed, wherever you live, you are likely to be within a few miles of a stockbroker's office. Many have outlets on the high street. The branches of many banks and building societies will offer services for buying and selling shares.

Over the past decade the greatest growth in stockbroking has been in execution-only services. These offer no advice, just a straightforward cheap dealing service. Accounts can be opened over the phone, by post or even via the Internet. Typical costs start at around pounds 15, although there are some execution-only brokers who will deal for less.

If you want the "Rolls Royce" type service, then you usually need a portfolio worth at least pounds 25,000 before going to see a provincial stockbroker, or pounds 100,000 when it comes to the City of London. Old-fashioned, full service still exists but at a price.

All stockbrokers are regulated, usually by either the Securities and Futures Authority (SFA) or the Investment Managers' Regulatory Organisation (Imro), and are required to have good adequate financial backing. Only individuals who are personally registered with the regulators as being "fit and proper" are authorised to give investment advice.

Clients are protected by both the insurance the stockbrokers carry and by the stock exchange itself. Should the worst ever happen, and a stockbroker gets into financial trouble, the stock exchange operates a rescue fund for bailing out private clients.

Over the years, investing in stocks and shares has proved itself the best means of amassing capital. But shares are risky. Prices can go down as well as up, as we have recently seen. But even the dramatic fall in share prices in 1987 did nothing to undermine the continuing long-term upward trend. Investment in a sensible spread of shares over a reasonable period should normally yield a healthy return.

If you want to buy and sell shares you will generally need a stockbroker. Readers can get a free directory of stockbrokers and investment managers by writing to Apcims, a trade association.

The address that you should write to for more information is: APCIMS, 112 Middlesex Street, London E1 7HY.