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

Saxo Bank A/S (Headquarters)
Philip Heymans Alle 15
2900
Hellerup
Denmark

Contact Saxo

Select region

International
International

Trade responsibly
All trading carries risk. Read more. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

This website can be accessed worldwide however the information on the website is related to Saxo Bank A/S and is not specific to any entity of Saxo Bank Group. All clients will directly engage with Saxo Bank A/S and all client agreements will be entered into with Saxo Bank A/S and thus governed by Danish Law.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.