What are shares?
- Shares (also known as equities) are like tiny fractions of a company. If you own one, you own a little bit of the company and a proportion of the company’s value.
- You can own shares yourself, or you can pool your money with other people in a collective investment often known as a fund.
- Funds buy a selection of shares, which are chosen and managed by a fund manager. If you put your money into funds, you don’t have to do the work of choosing the individual investments.
- When you own shares directly you become a shareholder, which usually means you have the right to vote on some company decisions. This doesn’t happen if you invest in a fund.
How does investing in shares work
Investing in shares means buying and keeping them for a while in order to make money.
There are two ways of getting money from shares of a company:
- If the company grows and becomes more valuable, the share is worth more – so your investment is worth more too.
- Some shares pay you part of the company’s profits each year, called a dividend.
If you buy shares in larger, long-established companies you’ll probably get dividends, but you might not get rapid growth.
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