Shareholder explained to kids

A shareholder is someone who owns shares in a company. Shares are like tiny pieces of the company, and each share represents a tiny part-ownership of the company. So, if you own shares in a company, you are a part-owner of that company. There are two main types of shareholders: common shareholders and preferred shareholders. Common shareholders are the most common type of shareholder. They own shares that give them the right to vote on company matters and to receive dividends. Dividends are payments that a company makes to its shareholders out of its profits. Preferred shareholders own shares that give them the right to vote on company matters, but they don't usually receive dividends. Instead, they get a fixed rate of interest. If a company goes bankrupt, shareholders are last in line to get paid, after the company has paid its creditors. This means that shareholders are at risk of losing their investment if the company does poorly. Shares are bought and sold on stock exchanges. A stock exchange is a marketplace where shares and other investments are traded. The two most famous stock exchanges in the world are the New York Stock Exchange (NYSE) and the London Stock Exchange (LSE). To buy shares, you need to open a broker account with a stockbroker. A stockbroker is a company that buys and sells shares on behalf of investors. When you buy shares, you pay the stockbroker a commission. This is a fee for their services.