The simple answer is that you can make money owning shares. You can do this either by increasing the value of the share and selling to more than what you bought for, or by taking stock of dividends.

How do stocks work?

When you buy a share, this becomes proof that you own part of the company. After you have purchased the share, you will be registered as the owner of the share register, which is a register of all shareholders. The registration is done either by your broker or your bank. Shares are not really something you can take on physically, but the trading of shares is electronic and the shares are therefore registered in databases. Previously, they received a share letter which was a physical proof of ownership of the share. Nowadays, the ownership certificate is called a settlement note and it is a receipt of how many shares you have bought or sold, at what price as well as the business and liquidation dates the transaction has. You can access the settlement note through your bank or the institution where you have the shares.

Different types of shares

There are different types of shares, A, B and C shares as well as preference shares. Class A, B and C shares are also called ordinary shares, which is what you usually refer to when talking about shares in daily speech. Ordinary shares are issued, for example, when the company is started. As we mentioned earlier, you are a partner in a company when you own shares and the letters indicate differences between the types of shares, for example how much voting rights you have at the AGM. The dividend, on the other hand, does not differ between different types of shares. The companies themselves decide what the division of shares should look like and what rights each type of share should entail. A common scenario is that A shares entitle to more votes at the AGM, while B and C shares give fewer votes.