There are many different choices when investing in the stock market. Prices can change very quickly and dealing with this volatility can be overwhelming. Understanding how these investments work will help you make appropriate choices for your portfolio.
What are shares?
When you buy shares (also referred to as stocks or equities), you become a part owner in a company. Each share you own represents a claim on a company’s earnings and assets, and may entitle you to vote at the shareholder meetings.
How risky are shares?
Compared to some other types of investments, shares can be riskier but can potentially offer higher returns. The value of shares can change very quickly over a short period of time. This is because shares are exposed to various types of market risk including the size of the market, financial stability of the company, general economic conditions and exposure to fluctuations in currency values.