Of the 60 million or so people in the UK, only a small percentage invest in shares. According to the Office of National Statistics (ONS), in 2008 individuals in the UK held £117.8 billion of shares (10.2%), the lowest proportion recorded in the history of the ONS monitoring it, which goes back to 1963.  

For the future wealth and prosperity of the UK, this is not a good thing. So why are we not investing in shares in the UK?

When I talk to people from all different backgrounds, I seem to get the same three reasons time and time again.

And the reasons are:

1.     It Is Too Risky

Risk is often more a personal perception than a reality. For example, we all know someone who thinks that flying is risky, yet the same person drives a car each day and may drink or smoke, or both. A rational assessment of the evidence would suggest that this person is being irrational.

Risk is always an arguable point, and it’s true that different investment options carry different types, and levels, of risk. However it is also true that if you always do what you have always done, then you will get what you have always got. In the case of interest on basic savings accounts, that would be not much.

Investing in large and stable businesses like GlaxoSmithKline (LSE: GSK) or Tesco (LSE: TSCO) are not generally regarded as high risk, and offer the added benefit of paying the investor dividends that currently exceed the rates of most basic savings accounts.

 2.     It’s Too Complicated

 ‘There is some perverse human characteristic that likes to make easy things difficult’.

Warren Buffet

Investing in shares can be as simple or complicated as you make it.

Some of the core principles are quite simple and you don’t need any specialist business knowledge at all in order to start to appreciate some of the key principles behind what makes a share worth investing in from one that should be avoided.

3.     You Need A Lot Of Money To Do It

You can start investing in shares by investing a small amount as often as possible. Share-dealing services such as those offered by banks typically charge less than £12 for a trade, and less still for more frequent traders where the tariff can drop to below £8.

If you are buying shares in a company that pays a good dividend, you can soon get the cost of your trade back. You don’t need a lot of money to build your wealth by buying shares in great companies for a good price. You just need to spend a little time reading relevant information, learn some basic principles and go for it.

 ‘You’ll always miss 100% of the shots you don’t take’.

Wayne Gretzky

Jamie E Smith is the author of Making Money From Stocks And Shares

This content was provided by one of our users, Jamie