Alternative Investment Market (AIM)

AIM is the London Stock Exchange's market for small, young and growing companies.

There are special tax breaks designed to encourage investors to put money into AIM stocks. Specifically, if you invest for a year or more, your investment will be treated as a business asset which will mean you'll face a significantly lower capital gains tax bill ( CGT ).

Investors should realise that they can achieve higher potential returns from investing in smaller companies, but with a higher degree of risk. Not only are AIM companies likely to be higher risk, their shares will be less liquid than shares in the main stockmarket, otherwise known as 'The Official List'.

From the point of view of the company wanting to join AIM, admittance rules are less onerous than for a full Stock Exchange listing. The market opened for trading on 19 June 1995 with no more than a handful of companies, but has grown steadily since.

If you want to invest in AIM shares but with a lower element of risk, you can do so through a collective investment such as a unit trust.

Last Updated: October 2007 © Moneyextra.com

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