Check out our guide to the basic principles to see how you can utilise them to your advantage.

Understanding a few basic principles can demystify something which is often seen as complex but in reality is part of our everyday lives. Far from being boys' toys, stocks and shares are increasingly popular and better handled by women. A recent survey of 35,000 investors in the US revealed that women's stock portfolios earned 1.4 per cent annually more than men's.

Buying a share means you own part of a company. It is possible to buy as little as one share in a company but the dealing costs mean that would not be very worthwhile. Most small investors tend to buy several hundred of any particular share. But because most companies tend to be divided into many thousands or millions of shares, owning several hundred shares will mean you are likely to be a very small fish in a big pond. If your company does well, then a share of the company's profits is handed out to shareholders in the form of a 'dividend'. This is usually paid twice yearly and is it taxable. The amount of dividend you get depends on how well the company does and how many shares you own. If a company is performing poorly you may not get a dividend at all that year.

The reason that shares are so popular is because they have the potential to out-strip the 'returns' - or profits - available through traditional savings accounts. When the stock market is doing well or shares in your company are in demand, you could see your investment grow substantially. When times are tough, the value of your company - and therefore the shares in it, will decrease and make your investment worth less. And this is the key thing to remember about buying shares - your money is at risk. There are no guarantees and no protection of the capital that you put in. Because of the risks associated with shares, investors tend to spread their money by buying shares in several companies rather than putting all their eggs in one basket.

Because of the risks associated with shares, investors tend to spread their money by buying shares in several companies rather than putting all their eggs in one basket Shares can be bought and sold through a stockbroker either over the telephone or online. The amount of commission you have to pay them varies and is usually given as a percentage of the amount you are spending. There is always a minimum charge, which is anything from £15 upwards. Then it can vary enormously but is usually around 2 per cent.

If you feel nervous about going it alone, then a 'collective investment' will provide stockmarket exposure but the risk will be shared with other investors. Collective investment is a general term which includes share-based, professionally-run products such as unit trusts, investment trusts and OEICs (Open-Ended Investment Companies). You can make regular contributions and your money is pooled with that of other investors and invested in a wide range of companies so that the risk is spread and shared. The performance of these investments may be more conservative than that of shares in one very successful company, but your losses will be much lower than if you invest direct in a company which bombs.

Investment trusts are companies that invest in the shares of other companies. The investment tends to be widely spread and this in turn reduces the risk to the investor. The price of your share is determined by the demand for shares in this specific investment trust company, as well as the underlying value of its investments.

Unit trusts are funds which also invest in the shares of other companies. You purchase 'units' in the trust and your money is then pooled with other investors to buy shares, with the risk spread across many different companies and markets. The future price of your units is dependent upon the value of the overall portfolio that the manager is running and not the demand for the units in the trust itself. Units are acquired directly from the management company, and are not traded on the stock market itself.

OEIC's are similar to a unit trust in that the number of units increase or decrease according to demand. However, like an investment trust, the investment is held in a company and units are purchased or sold at a single price. You can also hold investment trusts, unit trusts and OEICs in an ISA wrapper to maximise your tax advantages.

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