What makes share prices move?

The rise and fall of share prices has an impact on our lives even if we don't own any shares.  If your parents have a private or company pension it is more than likely invested in the stock market.

If the value of shares goes up the pension will be worth more and if the shares go down the pension will be worth less.

Understanding a little about the rise and fall of shares may help you make important financial decisions later in life.

It is clear to see when a company performs well their shares go up and when they under perform their shares go down.  This simple rule generally holds true but there can be times when the shares move in a way that goes against expectations.

When a company reports low profits investors may buy the shares because they hope things will improve.  This will force the share price to rise despite the report of low profits being bad news.

If a company is doing very well and has a very high share price investors only stand to lose money if they invest so the share price may fall.

These two examples demonstrate how important long term performance expectations are to the value of shares.

Why not take a look at some of the company performance charts on Junior Trader and see how much share prices have moved in the last year?

Share price changes are often very gradual but certain events can trigger huge rises or falls. If you find a company with a dramatic share price change try investigating a little further to see what caused this.

Tax Facts

Tax is one of the most important, but least popular aspects of money.

Tax is basically an amount of money that is paid directly to the government on any sum that you earn, or have in savings.

There are many different types of tax, but the key one we will cover here is called 'income tax'.

This is simply a tax on your income, and income can be described as money you earn (wages) or income from investments (interest).

An example of this would be if you earn £100 a week, then £20 of that goes to the government as tax, leaving you with £80.  The £80 is known as net pay or the money left after tax.

The government collects tax from everybody who works, or has investments.  They then use this money to pay for many different things such as schools, hospitals and roads that we all use.

Some people think that this is the fairest way of paying for things, as everybody contributes towards the things we all use.  Some however think it is unfair, because the more you earn, the more tax you pay.  In fact, if you earn over £150,000 per year, half of all your earnings goes to the government as tax!

The fact is though, there is no getting away from tax, and it is something that you will all pay as soon as you are earning money.