By MoneySense Editors on November 11, 2021

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By MoneySense Editors on November 11, 2021

What is equity? Why do you need to know this definition? The MoneySense Glossary is your resource for learning and understanding financial terms.

Equity investments , or equities, are the same thing as stocks or shares. When you buy equities, you get partial ownership of the company. Depending on the type of share, you may have voting rights for key company decisions. Some companies pay dividends to shareholders, in the form of cash or more shares. Share value can rise and fall, influenced by factors such as industry news, company performance and investor sentiment.

Example: “Equity investments carry higher risk than bonds but also have the potential for higher returns.”

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