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why do people buy shares in companies

The primary goal of investing is to make money, and by creating a diverse investment portfolio, you will reduce your chances of losing money. The stock market offers plenty of companies to choose from, allowing you to spread your money around and invest in multiple companies.

If your shares of Company B happen to decrease in value, the loss might be offset if shares of Company C are on the rise. If youвre already investing in other investment options, such as certificates of deposit (CDs) and mutual funds, venturing into the stock market will further enhance your portfolio diversity.
Investors buy shares in small, private corporations to generate wealth for themselves in the form of a return on their investment.

That return comes from dividend distributions or profit retention that increases share value.

Investors examine the historical and projected financials -- revenue growth, profit margins, return on equity -- as indicators of potential return. They review the companyвs goals and strategies. Investors often focus most on the management team that drives the companyвs accomplishments.

When investors have the funds and believe they can generate a healthy return, they will purchase stock in the company. Some investors invest larger sums to obtain a larger ownership stake or a board seat that allows them to influence company decisions.

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