However, so many people back in the 1990s considered it to be an acronym, and described it as the Alternative Investment Market, that the longer name stuck.

Thus a new City legend was born.

True or not, Aim was always meant to be a means for people to invest in smaller, newer, fast-growing companies, on a market with less restrictive regulation than the main market.

According to the London Stock Exchange: “Aim is the LSE’s international market for smaller growing companies. A wide range of businesses including early stage, venture capital backed as well as more established companies join Aim, seeking access to growth capital.”

It has indeed been a high-growth market, arguably the most successful growth market in the world. When it launched on 19 June 1995, there were just 10 companies, all domestic UK companies, with a total market value of £82.2m.

At the end of January 2016, it boasted 835 domestic companies, 196 foreign companies, equating to a total of 1,031 currently listed, with a market value of £68.26bn. In total, over the past 20 years, more than 3,600 global companies have joined Aim.

Some have not been successful. One only has to remember Langbar International, which when it collapsed in 2005 took with it an estimated £100m of investors’ money.

The Serious Fraud Office only closed its case file on the company in 2011.

But other companies have earned people a great deal of money. For example, investing £1,000 in clothing store Asos at launch in 2000 could have earned someone £160,000 by 30 June 2015 (source: Hargreaves Lansdown).

Yet at the end of June last year, Aim was down 24 per cent on its starting level in terms of performance, leaving investors with a headache.

While there are great companies and tempting tax incentives on Aim, there is also great volatility and the potential for a fallout.

It takes all the skill of advisers to tread the careful balance for their clients and this guide aims to highlight the opportunities and the pitfalls of Aim investing, as well as outlining the various tax changes that have helped make Aim more attractive to some investors.

Supporting information provided by: Clive Garston, consultant for DAC Beachcroft; Danny Cox, head of communications for Hargreaves Lansdown; Jeffrey Mushens, technical director of the Tax Incentivised Savings Association; Richard Hallett, director at Hargreave Hale; Richard Power, head of smaller companies at Octopus Investments; Chris Hutchinson, manager of the Unicorn Aim VCT; Annabel Brodie-Smith, director of communications for the Association of Investment Companies; and Jack Rose, business development manager at LGBR Capital.

simoney.kyriakou@ft.com