What is a share?

A share is a tiny piece of a business.

Picture a pizza cut into heaps of slices. The whole pizza is the company. Buying a share means owning a little slice of it, not lending the company money.

The whole pizza: The whole pizza stands for the entire business and all the shares people can own.

One little slice: One slice is your small part of the company. Some shares also come with voting or dividend rights.

Main point: A share means owning a little piece of a company. You might have ownership rights, but you’re not guaranteed a profit.

Why does the price keep changing?

Imagine a café chain is selling the same number of flat whites as yesterday, but investors suddenly think next year will be tougher.

Expectations change prices.: Share prices change as buyers and sellers rethink what a business might be worth. Profits, interest rates, competition and expectations all play a part. The price isn’t a live tally of sales.

What happens if the share price moves?

Say a share costs A$50. Move the slider to see what a rise or fall would do to that price.

This only shows the share price. Dividends, fees and tax can also affect what an investor actually earns or loses.

A good company isn’t always a good buy.

You can love a company’s products and still pay too much for its shares. There’s more to consider than whether the business is popular.

The business itself: Sales, costs, debt and competition all affect what the business might earn.

The price people pay: If lots of people pay a very high price, even a good company can deliver disappointing investment results.

The wider economy: Interest rates, the economy and changing rules can affect lots of businesses at once.

Main point: The business, the wider economy and the price people are willing to pay all affect a share’s value.

A share is part ownership.

When you own a share, you own part of a real business. But what someone is willing to pay for that part can change each day.

I own a small piece: You own a small part of the company, not just a number on an app.

The price can move: The value of that ownership can rise or fall as the market price changes.

Main point: You own a piece of a business, but the value of that piece can change.