Shares and Share Trading

Having ‘shares’ from a publicly listed corporation is one of the many types of money-spinning venture. When you buy shares from a certain company, you become its stockholder. A ‘share’ refers to the units of ownership interest granted to the stockholder. In corporate finance lingo, shares are also often termed as equity capital or stock. Shares embody a part of the company’s assets and profits (also termed as ‘dividends’).

If you will become a stockholder, the degree or scope of your ownership (also termed as ‘stake’) in a company depends on the number of shares you own in. If the publicly-listed company that you bought shares from has made available 100,000 shares, and from it you own 1000 shares, that means your stake is 1% of the company. Although 1 % may be a miniscule amount of shares, its monetary value may nor necessarily be the same, as shares of stocks may amount up to millions of bucks.

Dividends and Capital Gains
There are two ways to earn in stock investments. One is through dividends and one is with capital gains. When profits are earned by the company, the gained are shared to its stockholders are a set amount per share. So if the agreed amount per share set by the board of directors was 0.01$, and you have 1000 shares, then the dividend that you’ll receive will be 10$ on that given period. The dividends can be paid in cash, but smaller companies usually convert these gains into stocks as a form of reinvestment, so that it will gain more profit in the near future.
However, as time goes by, when the company’s stock is priced higher (compared to your buying price) in the stock market, and you decide to sell you shares, the profit you gain is called a capital gain.