A stake in the business
Investing in shares will make you part-owner of a business. Shares can be a sound long-term investment but are very risky to use in the hope of making a quick buck.
Shares may also be referred to as stocks, securities or equities.
MoneySmart has information on different aspects of investing in shares.
1. Benefits of investing in shares
2. Risks of investing in shares
3. Buying and selling shares
4. Choosing shares
5. Investing in shares
6. Managing your shares
Benefits of investing in shares
The benefits of investing in shares are:
1. Potential capital gains from owning an asset that can grow in value over time
2. Potential income from dividends
3. Lower tax rates on long-term capital gains
Risks of investing in shares
The risks of investing in shares are:
1. Share prices for a company can fall dramatically, even to zero
2. If the company goes broke, you are the last in line to be paid, so you may not get your money back
3. The value of your shares will go up and down from month to month, and the dividend may vary
Buying and selling shares
The most common way to buy and sell shares is on the share market using a broker or broking service. See how to buy and sell shares for more information.
Choosing shares to buy and sell requires time, research and analysis. However, if you're willing to put in the time and keep an eye on the market and economy, building a portfolio of shares can be rewarding.
Investing in shares
There are many ways to invest in shares - each has pros and cons. See different ways to invest in shares for more information.
Managing your shares
If you own shares, it's important to keep up with how they're performing compared to similar companies and the market as a whole.
See keeping track of your shares for some things you should do regularly to manage your shares.