If you are going to invest through the stock market, we had better start with what it is that you are actually buying.
You will be buying what are known as ordinary shares. You, together with all the other investors who have bought shares in a particular company, will become the owners of that company. You have a right to a say in the decision making and you share the profits through the payment of dividends.
These shares are often referred to as equities. They represent ownership of the company, just as you have equity in your house: the percentage of your house that you own when the building society’s loan is deducted.
The names of the shareholders and the number of shares held will be kept on a share register. ...