A 7.7% dividend yield makes shares in British American Tobacco (LSE:BATS) an obvious choice for investors looking for passive income. And it’s been very consistent recently.

Over the last five years, the firm has returned £11.40 per share in dividends, so investors who bought the stock in March 2020 have got around 37% of their cash back. But can it continue?

Business overview

British American Tobacco’s a company of two parts. The first is the combustibles business and the second is the new products category, which includes headed tobacco and nicotine pouches. 

At the moment, the traditional business generates strong cash flows. But it’s no secret that the long-term outlook for cigarettes isn’t positive and decline is probably inevitable here. 

On the other hand, the new categories division is growing. However, it’s a long way off generating the kind of cash flows that might sustain the dividend over the long term. 

Investors need to think about one big question. Can cigarette volumes hold up for long enough to allow the new products to grow into a business that can justify the current market-cap?

Cigarettes

In 2024, things held up okay in the combustibles part of the company. Despite sales volumes falling, organic revenues came in roughly in line with the previous year. 

It’s worth noting however, that this was largely the result of substantial declines in the US being offset by growth elsewhere. And there are potential difficulties ahead in the next year.

British American Tobacco is anticipating regulatory challenges in Bangladesh and Australasia to weigh on sales in those areas in 2025. This could be a significant issue for cigarette volumes.

With combustibles generating £21bn in sales, minor declines are almost certainly priced into the stock. But I don’t think investors can afford to ignore the early signs of decline. 

New categories

Growth in the new categories division was (unsurprisingly) a lot stronger. Overall, this came in at almost 9%, but there were some much more impressive results beneath the surface.

The product I’ve been keeping an eye on is Velo – the firm’s nicotine pouch. Given the success of Zyn (a similar product from Philip Morris) I think this is where investors should be focusing. Velo volumes increased by 56% in 2024. But the scale of the challenge ahead becomes clear with the fact this resulted in revenues of £790m, in the context of a £67bn company.

The entire new categories division brought in £3.5bn in revenues, representing 9% growth. But investors should also be aware of regulatory risk even for non-combustible products. 

It’s complicated

There are two strategies a passive income investor could take with British American Tobacco shares. One is to consider buying the stock early, before cigarette sales fall away by too much. The other is to wait and look for sustained growth from the new products before making a decision. The idea would be to limit the risk by getting a clearer idea of the long-term outlook.

Either might be defensible, but neither is obviously a good idea. Regulatory risks introduce a lot of uncertainty and I think passive income investors have better opportunities to consider elsewhere.

Deciding what to put in my Stocks and Shares ISA isn’t easy. There are over 60,000 listed companies to choose from, covering a multitude of countries and industries. But the defence sector is one that I’ve never invested in.

And this begs the question: is it ethical to try and make money from companies selling arms and other military hardware? After all, these products are designed to kill people and inflict maximum damage on property.

Conflict(ed)

Monday (24 February) was the third anniversary of Russia’s invasion of Ukraine.

And since this date, the BAE Systems (LSE:BA.) share price has more than doubled. It’s a fact that many investors have profited from the war.

With the group’s financial performance improving significantly during this period, it’s not surprising that its share price has increased so much.

Comparing 2024 with 2021 — the last full year before the war started — sales have increased by £7bn (33%), new orders are up £12.2bn (57%), and earnings per share has risen by 43%.

The company’s medium-term prospects also appear to be assured. At 31 December 2024, the order backlog was £77.8bn, nearly three times the group’s annual sales.

And with President Trump wanting NATO members to spend more on their armies, navies, and air forces, this trend could continue. Indeed, the UK government announced an increase this week.

In 2025, the company is expecting sales to increase by 7%-9%. And it’s predicting an 8%-10% increase in earnings per share. Remember, these forecasts were made long before America’s president re-ignited the debate on European defence spending.

Value for money?

But I don’t think the company’s shares are cheap. They currently trade on a historical (2024) price-to-earnings (P/E) ratio of 20, comfortably above the FTSE 100 average of approximately 14. However, it’s the same as, for example, Lockheed Martin, the world’s largest (in terms of revenue) defence contractor. Although, US companies do usually attract a higher valuation multiple than their UK peers.

And if BAE Systems can increase its post-tax profits by 10% in 2025, it implies a forward P/E ratio of 18.4. This doesn’t seem unreasonable for a rapidly growing stock.

But some investors use the P/E-to-growth ratio (PEG) to assess value for money. With a figure in excess of one, some would conclude that the stock is trading at a premium to its growth rate. In other words, it’s overvalued.

Another concern I have is that it’s heavily reliant on the US, which accounts for over 40% of revenue. I assume President Trump wants NATO members to spend more so that the world’s only military superpower can spend less.

Decision time

Personally, I wouldn’t rule out investing in the sector. I subscribe to the view that it’s the first duty of government to keep its people safe. And BAE Systems has benefitted from increased military spending by those trying to defend Ukraine from an aggressor.

Some investors distinguish between conventional and unconventional (for example, cluster munitions) weapons, refusing to fund companies making the latter. I agree with this approach. And as far as I’m aware, BAE Systems doesn’t manufacture these.

But I don’t want to invest. I think the recent share price rally means I’ve probably left it too late. And its dividend isn’t high enough — the stock currently yields 2.3% — to compensate.

The debate over whether the Vodafone (LSE:VOD) share price offers good value rages on. And based on comments I’ve seen, investors appear to have widely differing views about how to interpret the group’s most recent trading update, released on 4 February.

For the year ending 31 March (FY25), the group remains on course to report revenue of around €37bn. Adjusted EBITDAaL (earnings before interest, tax, depreciation and amortisation, after leases) of €11bn is anticipated.

The directors hope that the recent restructuring exercise will result in a slimmer group, albeit one that uses its assets more efficiently. Here’s my attempt at providing a balanced view.

A bullish view

Vodafone’s business in Germany has been struggling. And its performance has a material impact on the group. However, during the third quarter of FY25, there were some signs of a recovery, with the directors reporting “improving customer trends”. An additional 23,000 individuals entered into mobile contracts during the period.

In my opinion, it’s good news that the company has agreed to sell its division in Italy for €8bn, following on from the disposal of its Spanish business. This’ll generate some much-needed cash to help reduce the group’s borrowings. And it should improve the return on capital employed.

Encouragingly, net debt continues to fall. At 30 September 2024, it was €31.8bn, compared to €33.2bn a year earlier. And it’s much lower than it was at the end of FY20 (€42bn).

Also, the group’s coming to the end of a €2bn share buyback programme, which should help improve earnings per share.

The proposed merger of the group’s UK operations with Three was given regulatory approval in December. The company says this’ll promote greater competition and ensure better value for consumers.

And a bearish view

Vodafone Germany has been impacted by a change in law which prevents the bulk-selling of TV contracts. The division remains loss-making and lost 5,000 business customers during the third quarter of FY25. This contributed to a 7.6% drop in service revenue, compared to the same period in FY24.

Selling its division in Italy will generate some cash. However, it’ll continue the trend of making the group smaller. During FY24, the country contributed €4.67bn to revenue.

Although the group’s indebtedness is improving, it still remains high relative to earnings.

The group’s €2bn share buyback programme’s nearing completion. However, in my opinion, it doesn’t adequately compensate shareholders for the 50% dividend cut announced last May.

Although the company’s merger with Three is likely to complete in the first half of 2025, I don’t know what this means for shareholders. Annual cost and capital expenditure synergies of £700m are expected by the fifth full year post-completion. But this feels like a long time away.

On balance

Overall, although Germany remains a concern, I think the stock continues to offer good value. The 204 listed telecoms companies in Europe have a trailing 12-months price-to-earnings ratio of 13.7. During four quarters to 30 September 2024, Vodafone reported earnings per share of 8.59 euro cents (7.12p at current exchange rates). Applying the European-wide multiple to this figure gives a possible valuation of 97.5p.

This is a 39% uplift to its current (28 February) share price. On this basis, I think Vodafone could be a stock for bargain-hunters to consider.

I reckon those holding Lloyds Banking Group (LSE:LLOY) shares for passive income would have been delighted with the group’s 2024 results, which were released on 20 February.

That’s because the bank’s going to pay a total dividend for the year of 3.17p a share. This beat the average forecast of the 18 analysts covering the stock. They were predicting a payout of 3.09p (2.6% less). And it’s a 15% increase on the amount paid in 2023.

Prior to the announcement, these analysts were expecting future dividends to be 3.33p (2025), 3.74p (2026), and 4.26p (2027).

Given the increase that’s been announced, I expect these forecasts to be upgraded. Let’s assume they are all increased by 2.6%. The revised figures would then be 3.42p (2025), 3.84p (2026), and 4.37p (2027).

What does this mean?

Assuming a share price of 71p, if these predictions come true, a £20,000 investment made today would generate passive income of £3,276 over the next three years. I chose this figure as this is the maximum annual allowance of a Stocks and Shares ISA. Using this investment product ensures that income and capital gains aren’t taxed.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

However, if the dividends were reinvested buying more shares at a price of 71p, the same lump sum would grow to £23,457. This process is known as compounding and has been described as human kind’s greatest invention.

That’s a three-year return of 17.29%, equivalent to an annual rate of 5.46%. This is much higher than any rate of interest that can currently be earned on one of the bank’s fixed-term deposit accounts.

Sounds good to me.

A health warning

Yet it’s important to remember there are no guarantees when it comes to investing. Dividends can fluctuate from one year to another. It’s not uncommon for payouts to be reduced (or suspended) during difficult times.

This makes it tough to accurately predict the returns to shareholders. In fact, the bank increased its 2024 dividend despite reporting lower earnings than forecast.

Also, it’s unrealistic to assume that the Lloyds share price will be unchanged for three years. Yes, investors will be hoping that it rises, in line with the predictions for the bank’s earnings. However, it may fall. And this could wipe out all of the gains from the passive income.

Final thoughts

Not everyone likes banking stocks. This is reflected in relatively low valuation multiples for the sector. According to McKinsey & Company, the sector has the lowest price-to-earnings ratio of any industry.

But Lloyds has an impressive balance sheet. At 31 December 2024, it disclosed total assets of £907bn, including loans to customers of £459bn. It also held cash of £63bn. In my opinion, it has the financial firepower to keep growing its payout.

For 2024, it returned 50.3% of its earnings to its shareholders by way of dividends. This suggests there’s plenty of headroom should future events not go as planned.

With this in mind, I think those investors looking to earn generous levels of passive income over the next few years could consider Lloyds shares.

Warren Buffett’s famous for his pithy comments and interesting insights. However, I think it’s fair to say that the billionaire investor has yet to fully embrace the artificial intelligence (AI) revolution.

At the 2023 Berkshire Hathaway shareholders’ meeting, the company’s chairman and chief executive likened AI to a genie being let out of a bottle. And admitted that its power “scares the hell out of me”.

Out of curiosity, I asked ChatGPT to tell me what Buffett’s best quote is. It replied: “Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.“

Not very original

Like most of the American’s quotes, I’ve heard this one before. And if I’m honest, I think it’s a bit of a silly answer. The dictionary says ‘best’ means excellent, outstanding or desirable. And while I acknowledge Buffett was trying to be funny, I don’t think it’s his number one.

I therefore went back to ChatGPT and asked: isn’t this obvious?

Although agreeing with me, the software stuck to its guns and replied: “Buffett’s quote serves as a constant reminder that, regardless of market trends or temptations for quick gains, the primary goal in investing should be the preservation of capital. This focus on risk management is a foundational yet often overlooked aspect of successful investing.”

After asking how this is achieved, the software went on to explain the importance of understanding what you invest in, thinking about the long term, and the value of diversification. Along with seeking to only buy businesses that are undervalued, these are the cornerstones of Buffett’s strategy, which he’s deployed over a lifetime of investing.

And in my opinion, sound advice.

Top of the stocks

Despite being nervous about AI, Buffett’s biggest shareholding (or more precisely, that of Berkshire Hathaway) is Apple (NASDAQ:AAPL).

It’s a company that’s invested billions in developing its own version of the technology – ‘Apple Intelligence’. And it plans to spend much more, including an unspecified amount on constructing a huge new factory in Texas to build servers for data centres. Unlike some of its products which are assembled in China, anything coming out of the US factory is likely to escape President Trump’s tariffs.

But despite these growth plans, Berkshire Hathaway’s sold approximately two-thirds of its holding in the tech giant since September 2023.

Buffett’s previously indicated that his investment vehicle’s been divesting as a means of limiting the tax it pays on capital gains. Others have interpreted this as a sign that he thinks Apple’s over-valued. It currently trades on a historical price-to-earnings ratio of around 39.

And sales of its flagship products – iPhone, iPad and Mac – are flat. Worryingly, it’s yet to replicate the historical success of these with its other products. That’s why, in my opinion, its investment in AI’s crucial.

However, despite these concerns, it’s important to remember that the company’s been written off many times before. And yet it keeps on delivering. Of the 51 analysts covering the stock, 46 say it’s a Buy or Hold.

And since February 2020, its stock price has increased by over 250%. Also, it regularly tops the polls as the world’s most valuable — and most recognisable — brand.

For these reasons, Apple’s a growth stock investors could consider adding to their portfolios and holding for the long term.

Rolls-Royce Holdings (LSE:RR.) shares soared 16% on Thursday (27 February) after the group released its 2024 results. Investors seemed impressed that underlying revenue was £507m (2.9%) higher than the consensus forecast of analysts and, more importantly, pre-tax earnings were £242m (11.8%) better. Earnings per share beat the analysts’ expectations by 9.1%.

However, I suspect most of the impressive rise in the share price resulted from the directors announcing an upgrade in their mid-term targets.

Dividends to resume

Significantly, after an absence of over five years, they also reinstated the dividend. Subject to shareholder approval, those on the register on 22 April will receive 6p a share on 16 June. Again, this beats the forecasts. Analysts were expecting a payout of 5.2p for 2024.

Rolls-Royce last paid a dividend in January 2020. It’s well documented that the pandemic nearly wiped out the company, and it’s taken a few years for the group’s balance sheet to be sufficiently robust for it to be in a position to resume payouts once more.

In another move designed to pleased shareholders, the group announced a £1bn share buyback programme for 2025. In theory, this should increase earnings per share and increase the value of the group.

But after the surge in its share price, the stock’s now yielding a rather miserable 0.8%. This is way below the FTSE 100 average of 3.6%. If the company decided to use the cash set aside for share buybacks to increase the dividend, it’d have only a marginal impact on the yield.

Based on the current number of shares in circulation, the dividend will cost £510m. The same sum in 2020 would’ve resulted in a 26p payment to shareholders. However, since then, the company’s had to issue another 6.57bn shares to survive.

I think it’s going to take a long time before Rolls-Royce is considered a dividend share once more.

A remarkable performance

However, with a 249% increase in its share price over the past five years, it’s been the best performing growth stock on the FTSE 100.

Despite persistent concerns that it’s over-valued, the company continues to upgrade its earnings forecasts which helps maintain the upwards momentum in its share price. It now trades on a historical (2024) price-to-earnings (P/E) ratio of 36.7.

This makes other stocks look cheap. For example, BAE Systems‘ P/E ratio is around 20.

US companies usually attract a higher valuation multiple than their UK counterparts. But Rolls-Royce shares are now more expensive than those of RTX Corporation, the world’s largest aerospace and defence group.

With such a strong stock performance, it’s tempting to think that the bull run will end soon. The group’s aerospace division is particularly vulnerable to a global economic slowdown. And constantly having to innovate — and come up with new products — is expensive.

But the company continues to win major contracts, including one for £9bn to power the UK’s nuclear submarine fleet. It’s also leading the way in developing small modular reactors (factory-built nuclear power stations), which many believe will help transform the energy sector.

And even before the company’s 2024 results were released, 12 out of 17 brokers rated the stock a Buy.

For these reasons, Rolls-Royce could be a stock for growth investors to consider but, in my opinion, income investors should think about looking elsewhere.

One common way of trying to earn passive income is buying shares in proven blue-chip companies that pay dividends.

Indeed I do that myself. I own a number of dividend shares. Some, such as Legal & General (LSE: LGEN) are popular with quite a lot of private investors looking to earn some extra money without working for it.

The beauty of this passive income idea is its simplicity

So, how does this work in practice?

I bought the Legal & General shares and now sit back and earn dividends whenever they are paid. It really is that simple!

In under a fortnight (on 12 March), Legal & General will unveil its final results for 2024. Part of that will be announcing its dividend. In fact though, it has already announced plans to grow its dividend per share annually at 5% for 2024.

If it does that, then the annual dividend will be around 21.4p. So, to target a £1,000 annual passive income, an investor would need to own roughly 4,673 Legal & General shares. At the current price, that would set them back around £11,355.

It is important that an investor does not put all their eggs in one basket, of course, so my example here presumes that Legal & General is just one element of a diversified portfolio.

What could go wrong?

That passive income is not guaranteed though. No dividend ever is.

Legal & General has set out a plan to grow the dividend by 2% annually from next year onwards. That is only a plan though: what happens in practice will depend on how the business performs.

The FTSE 100 firm has a good track record and its strong brand, large customer base and long history are all competitive advantages. But it did cut its dividend per share during the 2008 financial crisis. If another market crash happens, plummeting asset values could hurt profits at the business, threatening the dividend.

Even without that, as we hav seen, the firm plans to cut its annual dividend per share growth from 5% to 2% from this year onwards.

That 2% growth is still growth, of course. If it is delivered, an investor who bought 4,673 of the shares now could see their annual passive income grow above £1,000 as 2025 gives way to 2026.

But the cut reflects the fact Legal & General faces multiple challenges.

It operates in a highly competitive market. Its earnings over the past several years have been weaker than before. The recently agreed sale of a US business will raise cash but will reduce the size of its business, making it harder to sustain profits at current levels.

I’m invested in this high-yield share

That helps explain why the Legal & General share price is 7% lower than five years ago.

A falling share price could mean an investor loses money if they sell their shares for less than they paid for them.

But with a dividend yield of 8.5%, it is easy to understand why a lot of investors like the passive income opportunities offered by owning Legal & General shares. I am one of them and own some myself.

‘Explosive’, ‘dynamic’, and ‘high-octane’ are some of my favourite words. They aren’t ones I’d normally use to describe Unilever (LSE:ULVR) shares – but that might be me being unfair.

Over the last 12 months, the stock is up 13.5%. That’s enough to turn a £10,000 investment into £11,350 – and that’s before we get to the dividend. 

Time to wake up

Unilever shares have come to life over the last year or so. But before that, investors had to wait a long time for any meaningful signs of progress. 

A year ago, the share price was just below £40. Unfortunately, that’s also where the stock was trading at the start of 2017. 

Of course, this doesn’t mean the stock was dead money during that time. Investors who bought in March 2017 and held to the start of March 2024 collected £9.94 per share in dividends.

At just under £40 per share, that’s a return of 24% over seven years. In this context, the stock climbing over 10% in a year is quite a striking shift.

A change of direction

The climbing share price has coincided with a change in the company’s approach. Unilever has been divesting its weaker brands and focusing its investment behind its most successful lines.

It’s fair to say the results have been impressive – in 2024, underlying operating income grew 12.6%. The last time this happened was before 2017. 

The epitome of this is Unilever’s decision to divest its ice cream division this year. While Ben & Jerry’s, Magnum, and Wall’s are strong brands, the production costs are ultimately unattractive.

Given the success of the strategy over the last 12 months, it’s something of a surprise to see the company is also looking to divest its CEO. That’s the most recent news. 

Momentum

Last month, the news emerged that CEO Hein Schumacher was going to be replaced as Chief Executive by CFO Fernando Fernandez. The reason given by the board is to increase the pace of change.

Exactly what the next stage might be is unclear. But one idea is that it might involve the divesting of Unilever’s food brands, which include Marmite and Pot Noodle.

Growth in this category has been weak for a while. And there’s also speculation the firm might look to add to its existing strengths in beauty and personal care via acquisitions.

This is risky. While the company has had a lot of success recently by cutting its portfolio back, attempting to grow by buying other businesses introduces a danger of overpaying for growth.

Is there more to come?

Investors who bought Unilever shares 12 months ago should probably be very pleased with their returns so far. And I think the stock is still worth considering at today’s prices.

The firm is clearly looking to keep moving forward. And while growing through acquisition is risky, it doesn’t take much imagination to see where a potential target might be found.

It’s not so long ago that Unilever tried to buy Haleon for £50bn. With the company currently having a market cap of £34bn, another look at the stock might not be out of the question. But that’s just me speculating, of course.

I’ve been impressed with 3i Group (LSE:III) pretty much since I began looking at it. Shares in the private equity firm are up 302% since 2020, outperforming every other FTSE 100 stock.

The stock has been a winner, the business is strong, and the valuation looks reasonable. Yet, somehow, I’ve never bought the shares – and I don’t really have a good reason why.

A strong business

Private equity can be a volatile business. Returns are often huge when all is good, but when they turn around the situation can get ugly in a hurry.

The reason is straightforward – people naturally want to invest when they can see things going well. But when prices are high is exactly the wrong time to be thinking of buying things. 

3i has a way around this problem of investors showing up with cash at the wrong moment. It focuses on investing its own cash, which gives it the flexibility to buy when the time is right. 

The firm has been doing this since 2015. And – as it by magic – that’s when it went from being a volatile stock that trades sideways to something that has easily outperformed the index.

Valuation

That big advantage is still intact. And despite the outstanding performance from the stock, it’s currently trading at a price-to-earnings (P/E) multiple below 10. 

On a price-to-book (P/B) basis, things are a little different. The stock is trading at a P/B ratio of 1.8, which is high compared to where it’s been over the last five years. 

That reflects a degree of optimism. But 3i has an excellent record when it comes to generating returns on equity and I think this more than makes up for the elevated multiple.

In other words, it’s not valuation concerns that have stopped me buying the stock for my portfolio. It might have been better value before, but I think it’s still attractive today. 

Why haven’t I bought it?

The reason I’ve never bought 3i shares before is relatively simple. I’ve always seen other things that looked like better opportunities to me. 

There are clear risks with 3i. Its portfolio is heavily concentrated and there’s always the danger of overpaying for an investment – even the most disciplined investors do this sometimes.

That’s a consideration I take seriously, but it would be disingenuous to say it’s why I’ve never bought the stock. The reason is very much other opportunities elsewhere.

The volatile nature of the stock market means there’s always something that’s out of favour. And that’s not really been 3i in the time I’ve been looking at it.

What about now?

I’m not a believer in waiting for stocks to fall before buying them. There’s no guarantee this will happen and by the time it does, things might be different elsewhere in the market.

I do, however, think that the best way to build a diversified portfolio is to focus on the best opportunities at any given moment. And I’m not sure that’s 3i just yet.

My plan is to keep being patient with this one. But I’m not going to hold back if I think an unusually good opportunity presents itself.

It does not take a fortune to get into the stock market. In fact it is easily possible to start buying shares with less than £1,000.

I actually see some advantages to doing that versus saving up a much bigger amount to get going.

For example, it would let someone get into market sooner rather than having to sit on the sidelines for years, watching potential bargains pass them by.

Another benefit is that it should mean any beginners’ mistakes are less financially  painful than if investing with a far bigger sum.

Of course, no-one likes to imagine they will lose money with a rookie error. But successful investing is all about being realistic, including with yourself. Very few (if any) investors hit the ground running and never make a mistake.

Still, if an investor with less than £1,000 wanted to start investing for the first time, here are three watchouts I think could potentially help them improve their chance of building wealth.

1. Be clear about your objectives

Some people want to get into the next big growth story. Others start buying shares because they are excited by the passive income potential of dividends. 

In fact, people invest for all sorts of reasons and using all sorts of techniques.

One thing that can help (as in general in life) is having a clear objective.

This helps with assessing opportunities as they pop up. Otherwise the risk is that someone may just start buying shares without really knowing why. That is closer to speculating than investing.

2. Charts are useful – but not in isolation

A common mistake people make when they start investing is confusing what makes a good business with what makes a good investment.

They can be very different.

Take Aston Martin (LSE: AML) for example.

It sells very expensive cars to often very rich people. It also has a range of iconic models. If someone wants to own the famous DB5 used by James Bond, they will have to buy an Aston Martin.

Luxury carmakers tend to charge top dollar for their vehicles. But they can also charge steep prices on replacement parts during a vehicle’s lifetime. If someone drives like Bond, they may need to get their car repaired often. That all sounds lucrative.

Now, look at the Aston Martin share price chart. What do you see?

Some people will notice how far the share price has fallen and presume that Aston Martin shares are now a bargain.

But it is impossible – always – to know whether a share is good value or not just by looking at a price chart.

That judgment requires more detailed knowledge of a company’s business performance.

Aston Martin is a strong brand. But as its annual results revealed this week, it continues to burn cash in a way that would make even Bond blush. Sales volumes have been declining.

A share price chart can be useful – but never in isolation.

3. Trying to build wealth with low costs

Choosing the right shares to buy is important. So is how an investor buys and holds them.

Fees and other costs can eat into the financial returns.

That is why a savvy investor does not start buying shares without carefully selecting the right share dealing-account or Stocks and Shares ISA for their own needs.