To invest in a listed company, you can buy shares and become a shareholder of the company.
Stock is a share in the ownership of a company. As a shareholder you can get dividends and have the voting right.
Stocks are classified in many ways, such as industry segment, earning growth, dividend distribution or capitalization. Also the risk and return on stocks vary. For example, stocks in big, profitable and well-run companies - known as blue-chips - usually offer a lower risk and return. On the other hand, small cap stocks can offer higher returns, but also higher risks.
If you want stocks as one of your investments, consider how much risk you can bear, your dividend needs and expected return. Shareholders should keep an eye on the company's performance, prospects and the way it is run.
To get a better understanding of the financial healthiness of a company, take a look at the key figures contained in the profit and loss account, balance sheet and consolidated cash flow statement as well as the auditors' report.
Apart from these numeric tools, you also need to evaluate the qualitative factors, such as corporate governance, management quality, industry outlook, market share, competitive edge and business models.