Your regular financial commitments should be covered and provision made for unexpected expenses. Having done this, you are ready to consider investing the surplus in stocks and shares. Shares, as the name says, are shares in a limited company. Each shareholder is a part owner of the company in which they have bought shares. Shares in UK companies are traded on the London Stock Exchange.
Investors can buy and sell their shares whenever they wish.
Shares, also called equities, are issued by companies on incorporation and later perhaps when they are building up a business. The original shareholders might still own them, or they may have sold them to someone else through the stock market. If the company makes a profit, the shareholders normally have some of it passed to them. This is paid in the form of dividends. The amount paid in dividends varies year by year, depending on how profitable the company has been and how much money the directors want to keep in reserve for future expansion.