Shares are among the riskiest of investments, yet they are also one of the best ways to grow money, especially over the long term.
A share (sometimes called a stock, equity or security) is a slice of a company. These days on apps like Sharesies or Hatch you can even buy ‘fractionalised’ shares, which are ‘slices of a slice’ of a company. Owning these units, no matter how small, means that you own part of that company and can enjoy a portion of the profits it makes.
When the company does well, you do too, depending on how many shares you own. If it distributes its profits by paying a dividend, you get some of that. Even if it doesn’t pay a dividend, you can still look forward to a quality company becoming more valuable and your shares being worth more in time if the share price climbs.
Taking on more risk with shares generally means the potential for higher returns. Think of those returns as you getting paid for taking on that higher risk.