How shares work?

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Feb 20, 2023

Here’s how shares work:

1.  Public companies issue shares: Public companies raise capital by issuing shares of stock. When you purchase shares in a company, you’re buying a piece of ownership in that company.
2. Dividends: Companies can choose to pay dividends to their shareholders, which are typically paid out on a regular basis, such as quarterly or annually. Dividends are a portion of the company’s profits that are distributed to shareholders.
3. Voting rights: As a shareholder, you have the right to vote on important corporate matters, such as electing the board of directors or approving major transactions.
4. Capital appreciation: If the company performs well and its stock price increases, the value of your shares will increase, allowing you to sell your shares for a profit.
5. Risk and return: Investing in shares can be risky, as the value of your shares can decrease if the company performs poorly or the overall market conditions change. However, investing in shares can also offer the potential for higher returns compared to other types of investments, such as bonds or savings accounts.

It’s important to keep in mind that the value of your shares can be affected by many factors, including the company’s financial performance, the overall market conditions, and changes in the economy. As with any investment, it’s important to do thorough research and seek professional advice before making an investment in shares.