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What is a share?

By September 12, 2021No Comments

Have you heard about people investing on the stock market, buying ‘shares’, and you’ve just nodded along like you know what they’re on about? Yeah? Well the good news is that it’s happened to us all at one point, so hopefully after this post you’ll be able to nod with confidence!

So, what is exactly is a ‘share’?

A share is essentially a piece of a company.
Congratulations, that’s it… well there’s a bit more to it…

Take the image below. If you own 30% of shares, it’s not just a magical number, you own part of the entire company as well!

 

A share IS a piece of company, but it also represents part ownership of the company as well, which means when you buy a share, you own a part of the company, and a claim to the assets (and profits!) of the company as well.

What’s the point of owning a share?

The whole point of owning a share is to invest in the company. People invest to make money, which comes in two ways.

Your ‘share’ of the company grows. 30% of a huge pie makes you more money than 30% of a mini pie.
The company pays you dividends, which over time can be extremely profitable.

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