Back to stock market basics: What is a share?

Julie Brownlee, Fsp Invest, 27 Aug. 2015

Tags: share, what is a share, shares, investing in shares, stock broker, stock market,

If you want to invest directly on the stock market, you need to buy shares.

So what exactly is a share? And how can you invest in them?

Read on to find out…

What exactly is a share?

A share, as its name suggests, is a portion of a company. Shares are also known as stocks.

You can buy and sell shares on the stock market or by another form of agreement.

When you buy shares, it gives you rights and a share of the profits that are in proportion to the percentage of shares you own.

By investing in shares, you’re essentially become a part owner in a business. And when buying shares you should keep this in mind. You wouldn’t part with your cash to invest in a business without doing your homework, and the same goes for investing in shares on the stock market.

You hope that by investing in shares over time the share price will rise. This means in the future you can sell your shares for a profit.

How can you buy shares?

To buy shares on the Johannesburg Stock Exchange, the South African stock market, you need to open up an account with a stock broker. You can’t approach the stock exchange directly to buy shares.

Opening an account with a stock broker is a pretty straightforward thing to do.

Once you’ve selected a stock broker, you complete an application form, provide FICA documentation and deposit funds.

Then you can buy any shares you want on the stock market. You just have to tell your stock broker. If you want to sell any of the shares you own, again you need to instruct your stock broker.

So there you have it. What a share is.

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What if your current stream of cash dries up?

My mom had brought me up to believe that all you had to do to be financially secure was work hard and have a good job…

She was so very wrong…

If my only cash stream dries out – for whatever reason – I want to know I have other options to tap into. That’s why the idea of only having one source of income is so scary to me.

Have similar fears? I want to help you, please click here to find out how…


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