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What are Stocks and Shares for beginners?


To be honest it is quite acceptable to use the words Stocks and Shares interchangeably and nobody will bat an eyelid. In reality though, Shares represent a fraction of the companies Stock. But what does that really mean? Imagine Bitesized Money Inc is a bag of 100 marbles (the Stock), and everyone that owns one of the marbles owns 100th of the company (a Share). They benefit when the company makes money, they collectively vote when big decisions need to be made, and they share the pain when the company loses money in hard times. In simple terms this is how Shares work, when you buy a Share, you are buying a part of a company.

What should you pay for one of their marbles Shares? Well that is the tricky question and why investing is fun, but also carries some risk. Generally when a company is doing well, or people think it will do well in the future the price goes up, and when its future doesn’t look so good the price will go down. Company Shares are traded on a Stock Market, and people will buy and sell Shares if they think they look cheap or expensive.

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