Investing in the stock market (also called the sharemarket in Australia and New Zealand) is a relatively straightforward and simple process. These short lessons will explain why.

First, some preliminaries. A stock or share represents part ownership of a company. For example global miner BHP Billiton has ~6,000 million shares on issue; if you owned 600 million shares then you would own 10% of the company. Owning 6,000 BHP shares is no different, it just means your percentage voting interest is proportionately smaller.

People usually buy and sell shares on the stock market, as most companies choose to list their shares for trading on the stock market. This is because it is easier to have one central, official place to trade shares, rather than having to advertise in the local paper to buy or sell shares or via eBay or TradeMe. You generally have to buy or sell shares through a broker, because (historically) the broker has the responsibility to ensure that you do have the cash to pay for any purchases or you do have actual legal ownership of the shares which you wish to sell.