Investing: company shares explained

Are you thinking about investing in the stock market? Then, the first thing you need to understand are company shares.

09:05 30 July 2013

One of the best ways to grow your money is to invest in the stock market. This is the process of buying and selling shares for profit.

If you’re very new in this endeavour, the first thing you need to understand are shares. What are they and why do people buy and sell them?

Different types of companies from around the globe usually need funds to expand their business on a regular basis. It could be that they want to build new buildings, acquire smaller companies, or start a new business. These organizations have the option of selling shares of the company.

As an investor, buying shares will mean owning a small part of that company (depending on the number of shares that you buy). This means that should the company grow in the coming years, the value of your share will increase. If you decide to sell your shares, you’ll make a profit.

However, keep in mind that buying and selling shares come with risk. Should the company you invest in did not do well, the value of your shares may go down and this will result in losing your money.