Saturday, 22 June 2013

All about shares

All about shares

In terms of an investment, shares are a unit of ownership in a company which entitles the shareholder to a portion of the profits distributed by the company.

Business owners generally own the shares in their business, but for the majority of non-business people, the opportunity to own shares is either directly in your own name, or indirectly via your superannuation fund, and these usually invest heavily in the shares of different companies.

You can also invest in managed funds, exchange traded funds, or listed investment companies.  Investing in this way pools your resources with other investors and allows you to potentially invest in many listed shares, however, there are additional costs to consider with these options such as investment management fees.

Shares are generally longer term investments as their value can fluctuate both up and down. If you are prepared to invest for the long term, and accept some risk and volatility, then shares can be excellent investments.

In terms of which shares to buy, you should do your homework, or alternatively speak to your financial adviser.  There can be other benefits of owning shares and where to hold them, such as to reduce the amount of tax you pay on the profits.  A financial adviser would be able to help you in this sort of situation.

Make sure you check out Sally Tyrie's Q&A on All about shares to find out more.
Money Smart not Money Short


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