Investing In Shares

Investing In Shares – Understanding Investment Terms

Understanding investment terms is crucial when it comes to learning how to invest in shares. Since you are new to the world of investing, chances are you will be doing a lot of studying about how investment works. Naturally, you will come across plenty of investment terms. Below is a compilation of commonly used investment terms and what they mean.

Shares

A share is basically a certificate that represents a unit of corporate ownership. So when you own a share of a company, this means that you own a portion of that company. As one of the company owners, you are entitled to receive part of the company profits. You will also have a say when it comes to governance of the company. Naturally, the profits and authority that you will receive will be commensurate to the number of shares you have. For instance, a person who has hundreds of shares in a company will have more authority and will receive a bigger portion of the profit compared to another person who owns merely a dozen shares.

Share Price

The share price is the value of the company’s stock. Initially, this value will depend on the financial position of the company and market conditions.

Stocks

The term “stocks” is virtually interchangeable with the term “shares”. In most cases, the only difference between these two lies in the context in which they are used. “Stocks” is basically a general term for ownership certificates of no company in general while “shares” is often used when referring to a specific company.

Stock Exchange

The stock exchange is where stock buying, selling, trading and other related transactions occur. A company who wishes to go public and find investors must be listed in the stock exchange first. Stock exchanges usually have rigorous requirements for companies who want to join.

Stock Market

The stock market is where investors and companies sell, buy or trade stocks for a fixed price. Before companies can join the stock market, they need to be listed under the stock exchange first.

Market Share

Market share refers to the particular portion of market sales that a company has earned in a particular region and during a specific time period. For instance, if 100 cars were sold in a region and one company is responsible for 20 of those sold cars then that company has a market share of 20%.

Share Trading

Share trading occurs when two investors or brokerage companies exchange securities.

Online Trading

Online trading allows companies or individuals to invest in the stock market through the internet. These online accounts are provided by brokerages who wish to provide their customers an easier way to place their orders to sell, buy or trade stocks.

Stock Trading

Stock trading is the practice of buying and selling stocks with the objective of gaining a profit from the daily fluctuations of stock prices.

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