Equities

Equities - Why do investors buy shares?

Level: Beginner / Length: 11 minutes

Dividend income and capital growth are the two major reasons investors buy shares. These two groups have different investment objectives. In this module we’ll explore the rationale and objectives of different types of investors.


A diversified portfolio spreads your risk.

See an example of Warren Buffet as a value investor.


Investors who prefer the cash now are called income investors or value investors. They want a steady flow of dividends. The second group are growth investors. Their perspective is different. They hope to get a capital gain for holding their shares for a long time. 

In this module we’ll also explain the difference between:

  • Dividend income and capital growth - the two main reasons why investors buy shares.
  • We’ll see why diversification is a smart idea
  • And how inflation can erode the value of your returns

IMPORTANT INFORMATION

Please note that Saxo Academy is property of Saxo Bank A/S. The materials published on Saxo Academy should not be considered as financial, investment, tax, trading or other advice, or recommendation to invest or disinvest in a particular manner. SCML assumes no liability for any losses resulting from trading in accordance with a perceived recommendation or reliance on Saxo Academy materials. Following or replicating other traders involves risk. Past performance of a trader is not indicative of future results.