What is a share?

Share: A small piece of ownership in a company. If the company does well the value can rise and dividends may follow. If it does badly the value can fall.

A company splits its ownership into many small pieces. Each piece is called a share, or a stock. If you buy one, you become a part owner of that company.

The price of a share changes every day, because buyers and sellers keep deciding what they want to pay. If the company does better than expected, the price often rises. If it disappoints, it falls.

There are two ways to earn money with a share. The price can go up, and the company can pay out part of its profit as a dividend. Neither is certain.

Example
You buy 10 shares at 50 euros each, 500 euros in total. A year later the price is 55 euros. Your shares are now worth 550 euros, 50 euros more, which is a 10 percent gain. Had the price dropped to 40 euros, you would have a paper loss of 100 euros.

Watch out
With a single share everything depends on one company. If that company goes bankrupt, you can lose your whole investment.

Read more in the guide Buying your first stock: what happens behind the button.

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