What Are Shares?

We hear about shares everyday on the news but what are they and why are they important?

A share is a single unit of ownership in a company.  Each person who buys a share actually owns part of the company.

Companies sell shares to raise money and investors buy shares to make money when the company makes a profit.

Unfortunately, companies don't always make a profit.  If you invest your money in a company that loses money you will lose some, or maybe all, of your money.

Why are shares important?


Stock market trading



The companies listed on Junior Trader make up what is called the FTSE 100.  This is a list of the top 100 companies with the highest trading value on the London Stock Exchange.



How well these companies perform is seen as an indication of the strength of UK business.

On the evening news you will generally hear the newsreader talk about the FTSE 100 being UP or DOWN.  Sometimes, if one of the top companies has done really well or really bad, they will mention individual companies as well.

There are no rules saying which companies you should invest in but there are some important things to remember:

• The price of shares can go down as well as up.
• Try not to put 'all your eggs in one basket'.
• Higher returns usually carry the greatest risk.
• Smart investors do lots of research before buying shares.