Financial markets play a crucial role in fueling modern economies. They offer listed companies capital to spur growth. Markets also provide individual shareholders an important way to diversify their own portfolios and to share in the world’s economic growth and vitality.
Millions of Europeans hold shares in listed companies. These ownership stakes give individual investors rights to vote during annual meetings on important business initiatives and officer elections. When investors buy company bonds, they hold companies’ debts and are remunerated with interest.
Individual investors can access financial markets in a variety of ways. Holders of shares in investment funds, such as Unit Trusts, mutual funds or pension funds participate in financial markets, in an indirect way. When it comes to investment funds, professional asset managers handle equity trading and managing of investments. This allows shareholders to hold stakes, without requiring active management.
Other individual investors who seek to actively manage investments often are interested in sophisticated instruments, such as warrants, options and futures. These and other derivative instruments are typically more risky than stocks, but also potentially more profitable.
