Different shares have different characteristics and it is important to understand what you are looking for. Primarily, investors buy shares either to see growth in the value of the shares, or to receive an income in the form of dividends.

For income, choose a company that pays a high yield and compare it with others in the sector. You can work out the yield by dividing the dividend paid by the price of the share e.g. price 200p, dividend 15p per share gives a yield of 7.5% You can get this information from newspapers that cover shares and from our Company Research facility.

Growth shares come in many shapes and guises.

Before buying shares you need to decide what level of risk you are prepared to take. Are you looking for shares that that don't carry too much risk, or are you prepared to accept higher risks in return for the prospect of higher returns?

'Risk' is quite a complex issue, for many factors can be taken into account - not all 'big' companies are 'safe'.

Shares in general are viewed as moderate risk compared to other types of mainstream investments - see our free guides to Investing. In the broadest terms, if you are a cautious investor then a portfolio of solid, 'Blue Chip' (normally FTSE100 shares) could be appropriate. However, if you are a more aggressive investor it may be an idea to look outside the FTSE, where the greater risk of loss carries the potential for greater rewards. For example you might want to look at AIM companies (Alternative Investment Market).

Use our SharePicker to help you decide what level of risk you can accept and which shares fit the bill.

Do you actually know what the company does? This may sound simple but many investors do not actually know what business the company is in.

Companies quoted on the stock market are sorted into sectors (e.g. utilities, transport, retailers) which give a broad idea of the company's main activity.

Newspapers typically list their share information by sector, so it's easy to see which sector a company is in. (You'll also find sector information in our Research section)

Look at what they do, who their competitors are, and how they compare - you're looking for what's going to give the company an edge over their rivals. Use our Company research facility to get a comprehensive picture.

If it's a retail company you can learn a lot on the high street - is stock selling, are the shops busy, or is it a case of one long sale which would cut their profit margins?

When buying a share in a company, you are literally buying a bit of the business. So it's important to know just who's running it! After all you'll be trusting them with your money.

You'll find a profile of the directors in the company's Annual Report and Accounts, often with some information about their previous roles and achievements. You can often access the Report online or order a printed copy via our free Report and Accounts service - look out for the cloverleaf symbol when viewing your account.

As well as the skills of individual directors, look at the balance across the Board too - they are a team and need a mix of skills.

Keep an eye on any new directors joining the company and any financial comment on the management in general. And watch for when they're buying shares - it shows confidence in the company and may be an indicator for you to follow suit. But still do your research too!

Once again our Company Research facility will give you many of the answers.

Many daily newspapers list basic financial details for shares trading on The London Stock Exchange: the actual content will vary from paper to paper.

They'll show you the core numbers to look at, but you can get a more comprehensive feel for the overall financial performance by using our Company Research facility - look up your company then click on the Financials tab.

If you're looking in the paper too, here's what you'd typically see: we've used the FT as an example:

Many UK companies have some of their business overseas, and that can have differing effects on the share price performance.

Factors like a country's economic climate, legal climate and political climate will all have an impact - and their physical climate makes a difference too.

Keep an eye on things such as interest rates, GDP, political outlook and social trends. And don't forget exchange rates - a rapid rise in a share price can easily be eaten away by a falling exchange rate!

Reading the financial pages and keeping an eye on our Market news will help.

Check the recent performance of a share you are considering buying to get some idea of what the market thinks, and try to work out why changes happen. Has the company announced a new product which is expected to do well, or is there speculation of a take-over which, if it proves to be just that - merely speculation - could see you paying too high a price?

It's an old cliché, but nevertheless true, that it takes two views to make a market. A fall in the price of a share may either represent a good buying opportunity, or it might be an indication that the company is struggling and therefore best avoided. Likewise, a share which has risen rapidly in a short period may now be overpriced and due for a 'correction'.

But don't try to get the timing just right - you hardly ever will! Instead, think about setting a target profit level which, if realised, you'd be happy to sell the shares for. And on the other side, set a maximum loss you'd be prepared to accept before recognising you may just have called that one wrong!

Our dealing limit options and alerts make it easy for you to do this. Set a Stop-Loss limit to trigger a sale if your 'loss level' is breached. Or a sell limit to take a profit. Find out more about Limits.

Many things will affect the value of the shares you own. It's difficult to factor every possibility into every decision, and even harder to keep an eye on all the things you'd need to be aware of - after all brokers employ large teams of people to look after just one sector, so trying to keep up on your own is a big job.

But one thing you can do is think about the impact of things you read and hear about in the everyday news. It's not just the financial pages that can help you steer you one way or another

For example, a high oil price should obviously have a positive effect on the share price of oil companies, but it will hurt a company such as British Airways, whose fuel bills will increase. Similarly, a very cold winter should result in increased revenue for electricity providers like National Grid. But with increased fuel bills, consumers might cut back on luxuries, having a bad effect on retailers.

Another old cliché, but nonetheless true.

Spreading your money across various companies helps reduce the overall level of risk. Not every investment decision you make will produce the desired result, but spreading them evens out the odds.

Don't forget that diversity means investing in different sectors too - it's just as risky to have all your money in several different companies operating in the same sector.

But the other side of the coin is spreading yourself too thinly. You can't expect to keep up with everything that's going on, so don't build too diverse a portfolio. For example, if you are new to the market and have £5,000 to invest, you could look to have maybe two or three companies. Or you might consider using funds or ETFs as a good way of getting some diversity without increasing the number of individual holdings.

If you already have shares in a number of companies, it may be more suitable to add to these investments, or sell some and re-invest the proceeds into the remaining holdings.

The 'right' number of companies in which to invest is not a precise science and depends on your individual circumstances. For further advice about what may be best for you, as a customer you can call our Advice team and speak with our qualified Advisors.

As Donald Rumsfeld famously said, there are known knowns, known unknowns, unknown knowns and unknown unknowns! Basically - you know what you know, but all too often you don't realise that there's information available that you don't know about.

So get another view. Newspaper tips are, all too often, too late - by the time it is published and read, the 'news' is already reflected in the share price. Hence, you might follow your favourite tipster's latest offering, but you should still do your own research.

To see the general market's view, look at 'What the brokers say' on the company information page accessible through our Company Research facility and keep an eye on our Market news too.

And for the latest information call our Advice team - the latest news, views and insights available free from our resident experts. (Calls to the AdviceLine are charged at your normal call rate)