What are shares?
Shares (also known as stocks) are defined as units of equity ownership in a corporation or company. The more profitable a business is, the higher perceived value of that share. A share is a way to trade an ownership stake in that business with other people.
For example, suppose a hypothetical company has issued 10 million shares. 1 million of those shares would be 10% and represent 10% of the company. If the value of the company increases, so does the individual share price.
The value of a company’s shares can often rise and fall depending on how many people want to buy and sell the shares at a given time. This fluctuation in price can be influenced by many different factors, including the current performance of the company, news on current development and plans of the business, and how confident investors are in its future performance.
The shares of more than 2,1000 companies are listed on the ASX (Australian Securities Exchange). Thes range from everyday brands like banks or retailers to lesser-known firms, including mining, manufacturing and medical companies.
Different types of shares
On the ASX, three different share classes are traded. When choosing shares to invest in, it’s important that you understand how each share class differs from one another, as each has its own unique qualities that will impact your choice.
These three types of shares are:
Ordinary shares
Preference shares
Partly paid shares