Stocks, Shares or Equity
A stock is a share in the ownership of a company. As owners or shareholders, they have a claim to everything the company owns, and are entitled to share in its earnings and receive dividends. Bondholders receive interest and the principal, while shareholders can have dividends as well as profit from capital gains on liquidation of securities. Shares are held in the name of a broker or nominee, to make transactions and transferring quicker and easier.
Stocks have the greatest risk but the returns are highest among the three asset categories, having the best potential for growth. Volatile prices make them very risky and can be prone to huge losses. If investors buy stocks aligned to investment goals, and weather the swings over long periods; substantial returns can be made.
David Luke, Financial Advisor
Phone: 021 0229 7560