What Is Equity Investment?

Everyone expects to see great returns on their investment but sometimes it may seem like no money is coming in at all even though you may have invested in a number of certificates of deposits, bonds, etc. If that is the case then perhaps an equity investment may be something you may want to do some research on. For equity investments you would be buying stock on the stock market and get paid dividends whenever they are issued – many companies pay out dividends quarterly.

By putting your financial resources into an equity investment, it is only natural to hope for income from dividends and capital gain as the stock value rises. However, in direct correlation with its ups, when you have an equity investment in a company and their stock values go down your net worth decreases as well.

The value of your equity investment is determined by basic supply and demand. The supply is the number of stock shares available, and the demand is what the investor is willing to pay for that stock. If the market is flooded with more stock supply then demand for it, your equity investment may lose value. However, when the demand outweighs the available supplies, the equity investment value will increase.

Equity investment also has another meaning when it comes to the world of financial definitions. In infant companies equity investment is also called venture capital investing. For example, consider if you are working for a start up company and as part of your signing bonus they provide you with shares of stock (for when the company eventually goes public). In general, it is a high-risk proposal as the company may never go public and the stock share would be worthless. The term equity investment in this case refers to “buying” shares of stock with your efforts and gaining an equity investment in return.