How do shares work?

skaterdude

lets say you buy 10 shares from a company how do u make money out of it?
do they pay or sumting?
or do u make money when you sell the shares?
for example if a share islike 10 euros and you bought 10 shares what do you get out of it?
also what is the average price of shares im completely clueless
thanks

homer911

skaterdude wrote: »

im completely clueless
thanks

Skaterdude, by your own admission and by your questions, I'd say stay well clear of shares or you will lose your shirt. That being said, try www.itsyourmoney.ie for a basic introduction

Oafley Jones

skaterdude wrote: »

lets say you buy 10 shares from a company how do u make money out of it?
do they pay or sumting?
or do u make money when you sell the shares?
for example if a share islike 10 euros and you bought 10 shares what do you get out of it?
also what is the average price of shares im completely clueless
thanks

http://www.investopedia.com/beginner.asp

Register (it's free) and read the following sections. It's very well written and easy to follow.


Investing Basics Archive
Stock Basics Tutorial
Bond Basics Tutorial
Mutual Fund Basics
More lessons on the Basics

pocketdooz

skaterdude wrote: »

lets say you buy 10 shares from a company how do u make money out of it?
do they pay or sumting?
or do u make money when you sell the shares?
for example if a share islike 10 euros and you bought 10 shares what do you get out of it?
also what is the average price of shares im completely clueless
thanks

Skaterdude, here's a very simple introduction.

When a company wants to raise money for any reason (launch a new product / expand to a foreign market etc.) they can either borrow it from someone, thereby taking on debt . . . or . . .

They can sell the public a "share" of their company for a certain price.

So you don't really buy 10 shares "from" a company, you buy 10 shares "of" a company.

For example, you might buy 10 shares of Microsoft for $30 each (cost = $300). You then own a "share" of Microsoft, the company.

There are then 2 main ways you can make money out of it.

(1) Some companies pay a dividend - that is they pay out a certain amount per share you own. For example, Microsoft might pay a $2 dividend. In this case you would get $2 per year per share you own ($2 x 10 = $20). So Microsoft would pay you $20 per year.

(2) Depending on how the market (all investors) think Microsoft are doing in the marketplace (product or service success, management team, future potential), the shares of them may become more in demand or less in demand. When demand goes up, the price goes up. When demand goes down, the price goes down.(there are many many other reasons why price may go up and down)

These changes occur until an equilibrium price is reached and this market price is the price you see quoted in the newspaper or on TV.

So, next year Microsoft's market price might be $40 per share. You own 10 shares so you sell for $400. Therefore your profit for the year is equal to . . .

$400 - $300 = $100
plus dividend of $20

= $120 profit

Share prices constantly move up and down and therefore you can make and lose money by buying them.

On your last point, there is no "average" price of shares as such. All share prices of companies are different. Some might be as low as a few pennies or as high as thousands of euros/dollars depending on the particular company.

This is a very simple introduction but gives you a basic idea.

I hope it helps . . .

skaterdude

thanks a lot pocketdooz
you helped explain a lot, your post was really helpful,
do they only pay every year? or is it diffrent for every company?
how do you find out what companys are selling shares and how much?
and how do you buy a share? is it through the bank?

pocketdooz

skaterdude wrote: »

thanks a lot pocketdooz
you helped explain a lot, your post was really helpful,

You're welcome, no bother

do they only pay every year?

Dividends are generally paid quarterly, sometimes annually

or is it diffrent for every company?

Yes, it is different for different companies

how do you find out what companys are selling shares and how much?

You can find out every day in the Irish Times, business pages. Each company listed on the Irish Stock Exchange is there, with their share price for that day listed beside them

and how do you buy a share? is it through the bank?

You buy them through a 'broker' - most banks are affiliated with brokers. For example Bank of Ireland are connected with Davys and AIB are connected with Goodbody.



Before doing anything further you should read an introductory book or check out some of the good links posted by others above.

.

www.bloomberg.com

There is a free service where you can view neat little charts of share price performance.