Introduction
If you are new to the stock market, one of the first word you will hear is “Share”. But what exactly is a share, and how can you buy it?
Many beginners fell confused when they hear the word like share, stock equity or shareholder.
This blog will help you clearly understand what share is, why people buy share and how buy share step by step.
What is a share?
A share represents a small unit of ownership in a company.
When a company want to extend its business , lunch new products or enter new markets, it needs money. To rise this money the company divides its ownership into small equal parts called share and sell them to investors.
when you buy a share, you become a part owner or shareholder of that company.
If a company has 10,000 (10k) share and you buy 100 share , you own 1% of that company.
Why do companies issue shares?
Company issue shares mainly to raise money for business growth and expansion. Instead of borrowing money from bank, companies sell a part ownership to the public in the form of share.
And one important think is when a company issue share, it shares its business risk with investor instead of carrying the entire burden alone. Every business faces unpredictability due to market condition, competition , economic changes, and unexpected challenges. By selling shares the company allows investors to become part owner, meaning they also share the potential profits and losses. If the company performs well investors benefit through rising share prices and dividends. If the company faces difficulties the impact is shared among many shareholders rather than falling entirely on the company or its founders. This reduce financial pressure on the company and creates a more balanced and sustainable growth structure.