A share is a stake in a company. Investors hold shares directly in their portfolio as separate assets. Investors (shareholders) receive dividends, that is to say, a share of the company’s profits, providing an additional return on top of any increase in the actual value of the company’s shares.
In the German-speaking countries, shares are not seen as a way of participating in the success of companies, but rather as short-term, speculative instruments that expose the holder to high risks and losses, and therefore should only be held in bundled form through investment funds or insurance policies. It is true that the values of companies – and hence their shares – are liable to fluctuations and potential losses. This makes them riskier than savings deposits.
It is therefore advisable to spread share investments over a number of companies in order to reduce the risks. However, buying and holding shares directly has certain advantages over bundled products such as investment funds or certificates.
Having a direct stake in companies does not leave you exposed to additional risks such as non-transparent, short-term speculations, lending operations, forward transactions and other tactics that have become the norm with bundled products like investment funds. Therefore, particularly with a larger volume of assets, direct investments and the holding of shares, bonds and gold are to be preferred.