Equities (or stocks) represent owning a part of different businesses. In a Wealthsimple portfolio, you will own a small part of hundreds of different companies through the equity funds that our Investment Committee has chosen for your portfolio.
Stocks can go up and down in value and are generally regarded as riskier investments than cash and fixed interest. However, equities offer greater potential for a higher return ahead of cash and fixed interest, especially over the medium to long term (i.e. 3 years plus).
There are two ways that equities can provide a return:
Capital Growth
The market price of a share of a company goes up and down depending on on its performance and how appealing the company’s prospects look. In your Wealthsimple portfolio, the value of your equity funds will fluctuate depending on the share price of the different companies within the fund.
Income
At Wealthsimple, you will receive dividends* from your equity funds. As all the funds within a Wealthsimple portfolio are held in accumulation units, each dividend is automatically invested back into the fund to ensure your cash is working as hard as possible.
* A dividend is a distribution of profits from a company to its shareholders.
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