INVESTING IN THE SHARE MARKET

Summary

Owning shares means becoming a part-owner in a business, with the potential to profit from its growth or receive dividends. Investors can choose from a vast array of companies across sectors like technology and healthcare. They receive regular updates and can participate in annual meetings. Investment methods include self-directed online trading, full-service brokers, or managed funds. Shares are liquid and market-driven, making them easily tradable. For long-term gains, it's crucial to invest with a strategic perspective.

Takeaways

• 🏢 Owning shares means being a part owner of a business and having a stake in its success or failure.
• 🌍 There's a vast range of companies listed on share markets worldwide, offering diverse investment opportunities.
• 📈 As a shareholder, you may benefit from a company's growth through increased profits and share price.
• 📉 Conversely, if a company encounters problems, your investment could diminish in value.
• 💰 Many companies pay dividends, which are periodic distributions of profits to investors.
• 📨 Shareholders receive regular communications and updates from the companies they invest in.
• 🗓 Annual meetings provide an opportunity for shareholders to engage with company boards and management.
• 🤝 There are multiple ways to invest in shares, including self-directed investing, full-service brokers, and managed funds.
• 💼 Each investment method has its own advantages and is suited to different individual objectives and circumstances.
• 💹 Shares are considered liquid assets, allowing for frequent trading and quick buying or selling of portions.
• 🌐 Share prices are market-driven and fluctuate based on economic sentiment and company performance.

Q & A

What does it mean to be a shareholder in a company?

Being a shareholder means you own a part of a business. When you buy shares in a company, you own a small piece of it and share in its profits and losses.

How many companies are listed on the NZX in New Zealand?

There are approximately 150 different companies listed on the New Zealand stock exchange (NZX).

What are the potential benefits of being a shareholder in a company?

As a shareholder, you can benefit from the company's growth, as its profits and share price may increase, making your investment worth more.

What are the risks associated with investing in shares?

Investing in shares comes with the risk of the company running into troubles, which could lead to a decrease in share price or even the investment becoming worthless.

What is a dividend and how does it relate to shareholders?

A dividend is a share of the company's profits that is distributed to its investors. If you own shares in a company that pays dividends, you may receive a distribution periodically, which is your share of the company's profits.

How often do companies typically distribute dividends?

Dividends are usually distributed to shareholders every three months or six months, depending on the company's policies.

What kind of information do shareholders receive from the companies they invest in?

Shareholders receive regular communications from the companies they own shares in, which may include progress reports, updates on the business's performance, challenges faced, and future opportunities.

What is the purpose of an annual meeting for a company?

An annual meeting is an opportunity for shareholders to hear from the board and management about the company's performance, growth strategies, and to ask questions.

What are the different ways to invest in shares as mentioned in the script?

The script mentions three ways to invest in shares: doing your own analysis and using a discount online broker, going to a full-service broker for advice and reports, or using a managed fund where a fund manager makes decisions on your behalf.

What is the significance of shares being liquid in the context of investing?

Shares being liquid means they are traded frequently and can be bought or sold quickly and easily. This allows for flexibility and ease when entering or exiting investments.

How are share prices determined and what factors can influence them?

Share prices are market-driven and determined by the interaction of buyers and sellers. They can change daily and are influenced by economic sentiment and the prospects of the individual companies.

Why is it recommended to invest in shares with a long-term view?

It is recommended to invest in shares with a long-term view because the market can be volatile in the short term, and a long-term approach can help mitigate the effects of short-term fluctuations.