Shares

1. Dividends. These are payments made to shareholders as a way of sharing profits
2. Capital gains. This is the money you make if you sell your shares for a higher price than you paid.

This is normal – shares are volatile. You can view the value of New Zealand listed shares on the NZX website.

Only some types of share offers will have a Product Disclosure Statement (PDS). Share this! explains the difference between buying shares on primary and secondary markets and the different levels of disclosure that apply to these markets.

Unlisted shares aren’t on an exchange and there may not be an established market for their sales.

The company you’ve invested in could perform poorly, or fail. The share price could stay weak for a long time if the company consistently disappoints investors. Dividends may also fall if profits fall, or the company decides to keep more of its profits to reinvest in the business.

This can happen when the company you’ve invested in offers to sell you new shares to raise money but you don’t take up the offer. It can also happen when the company raises capital using complex investments that can cause your initial investment to be sharply reduced if you don’t know what to do with them.

You should aim for a mix of different shares to smooth out the ups and downs in value that typically happen. Diversifying doesn’t guarantee you won’t make any losses but done properly, it will help you manage your risk.

Holding shares for the long term enables you to smooth out price fluctuations. If you buy shares with money you’re going to need soon, you take the risk of being forced to sell at a low price.

No one can predict with certainty how a share will perform. Trying to pick a good time to buy or sell involves some luck, so make sure you’re fully informed about what you’re buying or selling, and why.

The performance of your shares will change over time. The company annual report will help you stay up to date with the business you’re investing in. See our additional resources:

• How to read a company annual report
• Keep an eye out for warning signs

A ‘low ball’ offer is an unsolicited offer to buy shares from you at significantly below the market price and/or where payment is spread over a long period of time.

‘Unsolicited’ means you don’t know the person making the offer and the offer is not part of an offer process such as share buyback from the company whose shares you hold or a takeover.

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