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Investing in a share buys you a piece of ownership of a company. Your share of ownership is also commonly known as your equity in that company. As a shareholder you can make money in two ways; by sharing in the company's profits (usually paid in the form of cash dividend), or by selling the share for more than you paid for it (called a capital gain).
Shares don't carry guarantees; you can lose money if the company's share price goes down or if the company stops paying dividends. Selecting which shares are right for your investments is probably the single largest topic of research and analysis in the investment world.
There are different styles of share investment management: Growth, which seeks to identify companies whose earnings are growing at an above-average market rate, and buy them at reasonable prices; and Value, which seeks to identify undervalued or out-of-favour stocks that offer exceptional long-term potential. Either management style can be appropriate for a retirement investor.
Shares are classified in many ways. You can buy company shares within an industry sector (such as banking, mining or technology), within a region (such as international or domestic), by the size of their capitalization (large and small), or by a number of other parameters.
One of the main reasons to invest in a managed fund is to benefit from the professional investment management the fund provides. So once you've established a type of share investment that meets your investment criteria, you can select a managed fund that matches your objectives without having to select the individual shares yourself.
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