Investment Basics - Shares

What are the advantages and disadvantages of investing in shares, also known as stock or equity? When you buy a share you're buying partial ownership of the company. This gives you a right to share in the company's profits and vote at company meetings. Shares are considered a high risk investment because they don't have a fixed value or a fixed income. To reward investors for the uncertainty of their investments, shares generally have higher returns. Shares give returns through dividend payments, which are the distribution of the company's profits, and possible capital growth in the price of the share. They can be very volatile so the price can fluctuate. They are highly liquid, meaning you can sell them if there is a demand, but there are costs associated with buying and selling shares and they are considered a long-term investment. There are also a lot of risks involved with shares as their benefits are based on the performance and profit of the underlying company. Like property, your shares can fall in value due to overall market forces that are outside of your or the company's control. In summary, shares give returns through dividend payments and potential growth in their value. They can be a volatile investment but also have the potential for greater returns than other investments. Shares can be bought and sold relatively easily but at a cost. Their capacity for growth allows them to be a long-term investment that helps keep your income ahead of inflation. If you need some financial assistance, you can give our Financial Information Service officers a call using the number in the description. And check out my next video where I'll talk about investing in cryptocurrency.