When investing in shares you are essentially buying part-ownership of a company. Shares may also be commonly referred to as stocks, securities or equities.
People invest in shares with the objective of generating wealth either through potential share price growth (capital gain), through income in the form of dividends, or ideally as a combination of both. Additionally there may also be tax advantages associated with franking credits attached to dividends, particularly for a SMSF.
It is important to remember that there are also risks involved when investing in shares. Share prices will go up and down in value over time and in some cases can even to fall to zero, while dividend payments can vary from year to year depending on the company performance.
Choosing which shares to buy and sell requires time, research and analysis. However, if you’re willing to put in the time and keep an eye on the market and economy, building a portfolio of shares can be very rewarding. The most common way to buy and sell shares on the share market is by using a broking service, these services can vary from full service to on-line do-it-yourself providers.
