What are stocks and shares?

Stock is ownership, or equity, in a company. Investors buy stock in the form of shares, which represent a portion of a company's assets and earnings (capital). As a stockholder, the extent of your ownership (your stake) in a company depends on the number of shares you own in relation to the total number of shares available.

Your stake may authorize you to vote at the company's annual general meeting, where stockholders usually receive one vote per share. In reality, however, most private investors' stakes are insignificant and many do not attend the annual general meeting and their votes revert to management in the form of proxy votes.

Stock symbols

A stock symbol, or "Epic" code, is a stock exchange's standard abbreviation of a stock's name. You can find stock symbols wherever stock performance information is published (e.g., newspaper stock listings, investing sites on the web).

Alongside the stock symbol you will find the most important performance indicators for that particular stock. Once you buy some stock, you will use stock symbols to find and monitor your stocks' performance.

What are the Risks?

The price of stocks is a function of demand, which is based on investors' perception of the company's future earnings prospects.

The choice of stock - income or growth - is usually a question of the investor's attitude to risk. Income stocks are generally safer and are preferred by more conservative investors.

Growth stocks are inherently more risky, but offer far greater potential for wealth accumulation through capital gains in the stock price. Of course, until you sell your holding, these gains will not be realized. As an investor, you should assess your appetite for risk and, based on this, select the stocks with which you are comfortable.

Timely information on a stock's performance is the key to good investing. The successful investor keeps a close eye on their stocks.

Here is a list of the standard performance indicators:

Performance Indicator Definition
Closing price The last price at which the stock was bought or sold
High and low The highest and lowest price of the stock from the previous trading day
52 week range The highest and lowest price over the previous 52 weeks
Volume The amount of shares traded during the previous trading day