Investors looking to build a successful shares portfolio are advised to focus on diversification, thorough research, and a long-term perspective. While buying individual company shares can yield significant returns, it also carries considerable risk, with some investments leading to substantial losses.

For instance, shares in British engineering firm Rolls-Royce have risen by more than 1,300 percent over the past five years, exemplifying the potential gains in stock-picking. Conversely, Ocado, an online grocery delivery company, has seen its shares fall nearly 90 percent during the same period. The divergent outcomes highlight the challenges investors face in predicting a company’s future performance, especially amid fluctuating market conditions such as those introduced by the COVID-19 pandemic.

Experts emphasize that successful share investing requires a willingness to invest time and effort into understanding company fundamentals, including balance sheets, earnings reports, and management performance. Owning shares means holding a stake in a company, which can increase in value if the business performs well. Dividend payments, which many companies offer, also play a key role in growing investment returns over time. Historical data shows that reinvesting dividends significantly amplifies overall portfolio growth. According to the Barclays Equity Gilt Study, an initial £100 investment in the UK stock market in 1945 would have grown to £11,570 by 2024 through share price appreciation alone, but with dividends reinvested, that figure would have increased dramatically to £326,231.

Diversification remains a cornerstone of portfolio strategy, with research suggesting that holding shares in at least 20 different companies across various sectors helps mitigate risk. Additionally, expanding beyond domestic markets is recommended, as access to international stocks such as Apple or Nvidia has become easier and more affordable for UK investors. A combination of globally diversified funds and selective individual stock picks, often referred to as a ‘core and satellite’ approach, is frequently advised to balance risk and potential return.

The cost of trading shares has declined significantly due to the rise of commission-free online platforms. Traditional providers like Hargreaves Lansdown have reduced fees, while platforms such as Trading 212, Freetrade, and IG now offer free share dealing and various fee-free account options. Investors who trade frequently, or who invest in foreign shares, should remain mindful of transaction and currency exchange fees, as these can affect overall costs.

By combining careful company analysis, broad diversification, and attention to trading costs, investors can better position themselves to build portfolios capable of delivering consistent long-term growth.