Cracking the facts
What are shares?
What exactly is a share? If you’re a beginner investor, watch this video to help you better understand the sharemarket.
What are shares?
What exactly is a share? If you’re a beginner investor, watch this video to help you better understand the sharemarket.
What are shares?
Learning about the sharemarket is a necessary step to begin investing in it. Essentially, a share is a unit of ownership in a corporation. A share is a unit of a stock. The term stock and share are used interchangeably to refer to financial equities.
Shares are bought and sold on stock exchanges, like the Australian Securities Exchange. Think of it as a grocery store for stocks. Investors buy shares to benefit from being an owner of that corporation or being a shareholder.
The benefits of buying shares will depend on your investment goals, and whether you want to trade or invest.
Investing in shares for the medium or long term allows investors to benefit from what is considered to be the main strength of the sharemarket. Over a long enough period, the sharemarket generally tends to see an upward trend. If you choose to invest, you can receive money as a shareholder through dividends. A dividend is a portion of a company’s profit paid to shareholders.
What are shares?
Other investors also make money through trading the stocks. They can make money through appreciation in the company’s value, which generally occurs when the company makes more money. For example, if you bought a stock that was originally sold at $30 and it appreciates over time to $300, you will see a significant increase in your investment if you decide to sell at the higher price point.
These benefits are what make shares an attractive option for those seeking to build their wealth, because on average, over a long enough period, your investment can increase, regardless of how many small increases in value your investments see over time.
Find more about buying, trading and investing in shares with nestegg.
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