If you already have some familiarity with investing and wish to follow the development of domestic companies from a ringside seat, direct investment in the shares of Finnish listed companies opens up an interesting venue.
As an owner, you will receive invitations to the Annual General Meetings where you can meet other shareholders and hear the policies and visions of the management straight from the horse's mouth. If the company pays dividends, you are entitled to them as an owner.
Direct share investment is also often the only way of investing in smaller listed companies, as you are not necessarily able to be an owner through funds.
We do not recommend investing in shares with very small amounts. For risk diversification purposes, your portfolio should include several different companies, preferably from different sectors. We recommend investing a minimum of 500 euros in one company, as the share of costs may rise too high otherwise.
Know what you are investing in
Share investors should familiarise themselves with the companies in which they are planning to invest. Today, there is just as much information available as you feel you need. You can find the basic information from the company websites. Perusing the annual reports is also fruitful. You can follow financial news to gain a perspective on the cause-effect relationships of things, the general economic environment, and the expectations on individual companies.
When obtaining information, you can also utilise the views, comments and recommendations of OP's equity research. You can activate the equity research service via op.fi and utilise it in both op.fi and OP-mobile.
The most important thing is that you know into what you are going to be putting your money. Never invest in a company the operations of which you do not actually understand.
A couple of rules of thumb
The following things are important in all investing
a) risk tolerance
c) investment horizon.
Investing always involves risks. Investors must decide how large a part of their assets they are prepared to risk. The larger the expected return on investment, the higher the risk.
It is not a good idea to put all your eggs in one basket; this is particularly true for investors. We recommend investing your funds in several different targets that preferably operate in different sectors. This allows a slump in, for example, the technology industry, to be compensated by the success of some other sector. One rule of thumb is that you should have investments in at least five different companies.
Diversification also includes diversification over time. We do not recommend investing all your funds at once; instead, you should buy stock at different times. This evens out the effect of share price fluctuations.
The investors must also understand that share investing is a long-term undertaking. If you know that you will soon need the funds for some other purpose, shares are not the best investment vehicle.