Shares

When you buy shares you buy part of a company.

As a shareholder in the company you may be paid a dividend on your shares. Like any business, the companies you invest in may perform strongly or poorly depending on a number of factors. These include the economy in general and trends being experienced by the industry in which the company operates. As a result, the dividend paid on your shares can go up or down depending on how profitable the company is. It may not be paid at all.

Similarly, share prices rise and fall over time. If you sell shares for more than you paid, you make a capital gain on your investment. But you will lose money if you sell when the price is lower than the price you paid.

Listed companies

Many companies list their shares on a stock exchange like New Zealand's exchange NZX. To buy or sell shares in a company listed on an exchange, you can use a stockbroker registered with that exchange.

Trading through a stock exchange offers some protections for investors, because both the company and the stockbroker must comply with the rules of the exchange.

The price of listed shares is available in newspapers and on the internet, including on the website of New Zealand's exchange NZX. This allows you to watch and see how share prices change over time.

Stockbrokers typically charge brokerage when you trade. This may be a proportion of the amount you invest or it may be a flat fee for each trade. Some offer research and advice as well as trading services.

Stockbrokers are listed in the Yellow Pages and on the NZX website.

Unlisted companies

You can buy shares in companies that are not listed on an exchange, including shares sold via a crowd funding service. But be aware it is likely to be harder to sell these shares, as there may not be an established market for their sale. Also, unlisted companies and their trading activities are not subject to all the rules that protect investors in listed companies (like insider trading and continuous disclosure laws).

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