Shares in companies are both income-earning (dividends) and capital growth investments (their underlying value can increase).

When you buy a share you are buying part of, or a share in, a company. You become a part owner. As a part owner you expect to get part of the profits. If a company has 10 shares and you buy one share, you can expect to get one-tenth of the profits. When profits are paid out to shareholders (people who own shares) the payment is called a dividend.

Companies sell shares for a number of reasons, including to expand or buy new machinery or to buy another company.

Once they have sold the shares to investors, the investors can also buy and sell shares on a secondary market, such as the BSE or the NSE.

There are a number of reasons why you as a shareholder may not wish to hold onto the shares you own: you may need the money for something else; you may not like the way the company is being managed and feel that profits may drop; or the company's business may have fallen behind the times.

The buying and selling prices of shares are influenced by supply and demand, which in turn is influenced by sentiment. The price of a share will go up or down depending on what investors think about the future profits of the company. If they think a company is going to make great profits, a lot of investors will want to buy the share, so the price will go up. Investors are notorious for buying shares when prices are high and selling them in a panic when the prices drop.

So, as with bonds, you can also make a capital gain (if you buy the share when it is cheap and sell it when it goes up in price), but, again, you can make a capital loss when shares drop in value.

You can buy shares both in companies listed on a stock exchange and in companies that are not listed. It is better to buy shares in listed companies because in order to be listed, these companies have to abide by certain regulations, and this gives you greater security. It is also best to buy and hold shares in companies with sound track records, if you are looking to make a return from the dividend payments while maintaining long-term underlying value.