Could someone take me through shares? What are they and how old do I have to be to purchase one?

I'm 15 and I just wanted to know if buying a share in a company would be a good investment. Also I have heard it is high risk, surely even if the share price drops, it will eventually pay for itself?

Can someone please just explain pretty much everything to me?

Explaining everything here would take too long. I suggest you read "The Truth About Money" by Ric Edelman. He is one of the top financial planners in the country and a best selling author. It is a fun and easy read.

Shares are a piece of ownership of a company. You need to be 18 unless your parents open a UGMA/UTMA account for you. I would suggest learning about mutual funds and investing there to start. The book will teach you what you need to know. You can also learn a lot from http://www.americanfunds.com/default-home.htm

If you get a share in a company, say at 1.02 it will cost you Â£1.02.
If the the share price goes up to 1.03, weee you have made a penny profit.
But to buy and sell shares you go through a broker, and they will charge for the service.
So don't buy "a" share buy thousands of shares, and you might make enough to cover the cost of the broker.
lol

Sometimes if the price drops, it never recovers even for good companies such as BT & Kcom.

I have lost quite a bit in shares and now I wish I never bothered. Mutual Funds are just as bad, even if you pick the fund which had the best results for the past three years, you could still end up losing money.

But if you are very lucky you could make a fortune, eg WPP in uk or Infosys ( indian markets) etc

When you buy a share you are literally buying a tiny part of a company. You are most likely to buy it from a previous owner of that share, though not necessarily. As a shareholder, you may well have the right to receive a copy of its annual report; to attend the company's annual general meeting and to vote on certain issues at the meeting.

A share may have a face value but it is virtually irrelevant and bears little or no relation to what you have to pay for the share or what you can sell it for.

You used to get a share certificate - not one per share but more usually one certificate showing the total the number of shares bought in that particular transaction. Now, shares tend to be held electronically with no paper certificate.

It is not true that shares will always hold their value. Suppose you had shares in a company that makes glass television screens or makes games for Amiga computers. Those markets have shrunk so there is no way for the businesses to make money. You may have paid Â£10 for a share but it may now be worth a few pence. Suppose the company goes broke? Your share is worthless.

So, shares are risky but you can spread your risk by having lots of shares in lots of different businesses in lots of different industries. Some might be going up in value while others are going down. Historically, a broad portfolio of shares will have increased in value over the years so a mix of shares is reckoned to be a good long-term investment - not short-term because the market is too volatile.

There are various ways of saving that enable you to own mixed bundles of shares jointly with other people, usually managed by a specialist organisation that buys and sells the shares to maximise the profit and also collects the dividends. They might call themselves 'Unit Trusts' or 'Equity ISAs' or various other names. These bundles spread your risks.

You make money from shares in two ways:
1. they go up in value and you sell them;
2. the business may pay annual dividends of, say, a few pence (it could be any amount but tends to be around a few % of the current share value) per share, or maybe a few Â£ if the share is very valuable.

I would expect you to have to be 18 (in the UK) to enter into any kind of financial contract though it is usually possible for your parent or guardian to act on your behalf until you are old enough.

This is an extreme simplification. There is a fantastic amount to know but, unless you understand these basics, it would not be helpful to go into more detail.

Shares....Jesus where do i start. Shares are what a company alows people to buy. It hold 51% of the shares and sells the rest of....if the price of share drops u may loose alot of money. People have lost MILLIONS of dollars by playing in shares and stocks etc. My advice stay out of it! it can eventually become a vice.

I suggest you open a free investment account with a company like ShareBuilder with the supervision of your parents. With sharebuilder you can buy whole shares or fractions of shares. Pick out companies you like and read about them at http://finance.yahoo.com.

You can buy shares in companies like Visa, Mastercard, Walmart, Apple, Inc., Google, etc. Just see what interests you and start investing.

And YES! buying shares, especially at your age, does pay off. Just remember, because you are 15, make sure you pursue investing with parental or guardian supervision:)

Shares for ordinary people is a mug's game. Don't even bother with them.

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