When people talk about growing money, three common terms usually come up: buying shares, investment, and dividends. They are closely related, but they do not mean exactly the same thing.
Buying Shares
Buying shares means purchasing a small part of a company. When a person buys shares, they become a part-owner of that company. For example, when someone buys shares of companies listed on the Nigerian Exchange Group (NGX), they own a small percentage of that company.
If the company performs well, the value of the shares may increase and the shareholder can sell them later for profit. However, if the company performs poorly, the value of the shares can drop, which may lead to losses.
Investment
Investment is a broader concept. It simply means putting money into something with the expectation of making profit in the future. Buying shares is just one type of investment.
Other examples of investments include real estate, agriculture, business ventures, mutual funds, and government bonds. The main idea behind investment is allowing money to grow over time rather than spending it immediately.
Dividend
A dividend is the portion of a company’s profit that is shared with shareholders. When a company makes profit, it may decide to distribute part of that profit to people who own its shares.
For example, if someone owns shares in a company and that company declares dividends, the shareholder receives money as a reward for investing in the business. Not all companies pay dividends, especially if they prefer to reinvest their profits back into the business.
The Difference
Buying shares is the act of purchasing ownership in a company.
Investment is the general process of committing money into something to generate profit.
Dividend is the profit paid to shareholders by a company.
Which Is Preferable?
Investment is the most preferable in the long run because it includes many options and allows people to diversify their income sources. Buying shares can also be very profitable, especially when the company grows and pays dividends regularly.
However, the best choice usually depends on a person’s financial goals, risk tolerance, and patience. Many experienced investors combine different investments — including shares that pay dividends — to build steady wealth over time.
In simple terms:
Buying shares is a type of investment, and dividends are one of the rewards that can come from that investment.