What are shares?

This article covers everything you need to know about the stock market. Learn about how shares work, how to research them for your portfolio, and how to buy and sell shares once you've made a decision.

Shares explained

Many people begin their investing journey with a fundamental question: What are shares? In the simplest terms, shares are individual units of ownership in a business that members of the public can buy. They are also often known as stocks.

Shares in listed companies are traded on exchanges, and you can buy and sell them online. By buying a share, you become a shareholder in that company. You can invest in shares with a number of different investment accounts.

What affects share prices?

Share prices are affected by many influences, including:

• The performance of the company
• Its plans for the future
• General market movements
• Global influences
• Industry-specific news

Often, share prices will move up and down slightly on a daily basis.

How to research shares

Investing directly in shares requires a fair bit of research. At first, reading up on the company and the hundreds of different listed companies might feel quite overwhelming.

Luckily, we have plenty of free research tools available, including investment articles and videos. As an AJ Bell customer, you can browse our lists of the top buys and sells and full access to Shares digital magazine for all customers.

Explore our shares offering Use our shares screener

How does the stock market work?

How many shares a company has depends on many factors. In the UK, listed companies are traded on the London Stock Exchange (LSE). Bigger companies with more shares can be listed on the main market.

Smaller companies may be listed on the Alternative Investment Market (AIM). There are fewer regulations for companies wishing to join AIM than LSE, so as a result, they can be riskier investments.

Indices track the performance of individual markets. For example, the FTSE 100 tracks the 100 largest companies on the LSE. This gives an indication of how the top of the market is doing, while the FTSE 250 tracks the next 250 largest. For a broader look at the market, you can look at the FTSE 350 (the two combined) or the FTSE All-Share, which tracks 98% of the companies listed on the LSE.

How do shares work in foreign markets?

If you're looking to invest in international shares, we offer dealing in over 24 markets, including:

• The US
• Canada
• Most European markets

Certain investments involving a high degree of risk are described as ‘complex financial instruments’. Before dealing in these for the first time, you will need to read up on the risks involved and complete an online test.

How to buy and sell shares

You can buy and sell shares online through our website or app when the market is open.

• For UK shares, this is between 8am and 4.30pm. Outside of these times, you can place limit and stop loss orders, which allow you to specify the price you are willing to buy or sell.
• Many overseas markets have different hours. For US and Canadian markets, for example, you can deal online between 2.30pm and 9pm.

What is a share dividend?

Many companies pay out income to their shareholders. These are called ‘dividends’. The dividend amount depends on the profits of the company, and they are normally paid twice a year as an ‘interim’ and ‘final’ dividend.

The date the dividend is paid varies from company to company. There's no guarantee that a company will continue to pay dividends – in fact, many smaller companies do not pay any dividends at all.

If you're due a dividend from a share that you hold in your portfolio, we will pay this into your account as cash and send you a secure message to let you know. Our dividend reinvestment service allows you to reinvest your dividends back into the company, increasing your holding.

Learn more about dividends

How to invest in shares regularly

You can build your portfolio over time by using our regular investment service. This is a great option for investing regularly or simply if you don’t want to invest an initial lump sum. It allows you to save from just £25 a month, and we’ll automatically buy more shares with this at the same time each month. You can easily set it up and amend your choice online. You’ll also benefit from our discounted dealing charge of just £1.50.