Are you interested in investing in the London Stock Exchange? If so, then you may have heard of AIM. AIM stands for Alternative Investment Market and it is a sub-market of the London Stock Exchange that focuses on smaller, growing companies.
What is AIM?
AIM was launched in 1995 with the aim (pun intended) of encouraging growth and entrepreneurship among smaller companies. Since then, it has become one of the most successful growth markets in the world, providing an opportunity for companies to raise capital and investors to invest in those companies.
How does AIM work?
Companies that want to list on AIM must meet certain eligibility criteria. These include having a nominated adviser (Nomad), publishing a prospectus or admission document, meeting certain financial reporting requirements, and maintaining good corporate governance.
Once a company is listed on AIM, its shares can be bought and sold by investors through their brokers. The market operates similarly to the main market of the London Stock Exchange, but with some key differences. For example, AIM is often seen as more flexible than the main market as it has fewer regulatory requirements.
Why invest in AIM?
Investing in AIM can offer several benefits. Firstly, there is potential for higher returns as smaller companies have greater growth potential than larger ones.
Secondly, there is diversification as investors can spread their risk across a range of sectors and industries. Thirdly, there are tax advantages such as inheritance tax relief for shares held for at least two years.
However, it’s important to note that investing in smaller companies also carries higher risks. These companies may be more vulnerable to economic downturns or other external factors that could impact their performance.
Conclusion
AIM provides an opportunity for smaller companies to raise capital and investors to invest in those companies. While investing in AIM can provide higher returns and diversification opportunities, it also carries higher risks. As with any investment, it’s important to do your research and seek professional advice before making any decisions.