Unbiased Independent Financial Advisers Ltd

What are Equity Investments?

Equity investments mean you’re investing money into a company by purchasing their shares on the stock market. Shares are small portions of a company, also known as stocks. Once you have a share in the company, they can be traded on a stock exchange.

 

An individual who owns equities, shares or stock is generally known as a shareholder. Shareholders are entitled to receive any dividend payments a company may make.

 

They also have the right to vote on decisions relating to the business, such as how much the management board is paid, or whether the company should proceed with a merger, acquisition or takeover.

 

How do stocks, shares and equities work?

 

Stocks, shares and equities work by giving you direct exposure to a company’s performance. Shares will rise in value when the company is doing well, and they’ll fall in value when the company is doing poorly.

 

Stock exchanges facilitate the exchange of shares in publicly listed companies. There are few ways for a company to ‘go public’, or ‘float’, but the most common is for the company to hold an initial public offering (IPO). An IPO offers a company a way to raise money by selling shares in its business. The number of shares issued, multiplied by the price for which they sell, determines a company’s market capitalisation, or ‘market cap’.

 

When undertaking an IPO, a company appoints advisers, including an investment bank which ‘underwrites’ the deal. This means it commits to buying any shares which remain unsold at the time of the flotation.

 

Where are shares traded?

 

Shares in publicly listed companies are traded on stock exchange, such as

 

  • London Stock Exchange (LSE),
  • New York Stock Exchange (NYSE)
  • Tokyo Stock Exchange (TSE)
  • Shanghai Stock Exchange

The value of pensions and investments and the income they produce can fall as well as rise. You may get back less than you invested

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