A share is the single unit of capital of a company, being of equal denomination to all other shares. These units of capital are put up for sale in order to raise funds for the company from whom it is bought. They can be purchased and sold via telephone, mail or through the Internet. Nowadays, because of its increased safety and efficiency, people generally buy shares online. Besides being quick and convenient it is also the cheapest form of trading.
When you buy shares online it is ‘execution only’, which means that a stock broker trades for you, without any advice. Every time that you do buy shares, you pay a small duty, which varies depending on where you are trading. When you trade online, it is through a company that facilitates the process. The best companies allow trading to happen in real time. That means that when you choose to buy a share, it happens as soon as the company gets word of your decision. Some companies cut costs by delaying deals to the end of the day.
The ideal online stock broker is one that has the necessary research tools to read up on proposed investments, has a price of trading that is profitable for its intended purposes (trading everyday versus trading once per week makes a big difference in the overall cost), and provides real time trading. Once a good, accomplished brokerage service is found, facilitating the entire process, you are free to buy shares online in your own time.
The way that profit is made is either through selling stocks for more than they were bought, or through dividends, paid out to all stockholders. When you buy shares online, it will usually be kept by the stockbroker service. Dividends are then paid out into your account. In a joint stock company, a dividend is appointed as a static amount per stock/share.
So, any given shareholder gets a dividend that relates to their proportion of the company that they own. When you buy shares online you can be a shareholder for several companies at once, earning money through dividends alone.
