What is equity?
Equity is how much of something you actually own, if you take away any charges you have to pay, or any money you borrowed to buy it. When you're investing, equity is stock or shares that give you ownership in a company.
Where have you heard about equity?
Equities are one of the main asset classes in an investment portfolio – so you may have heard people referring to stocks and shares as equity.
What you need to know about equity.
If you have equity in a company then you want that business to do well – so the value of your equity goes up. The value of your equity is determined by the company's share price. Equity in a company can also give you an income – if the company is doing well, you'll get a share in the company's profits paid to you as a dividend. Equities are bought and sold on the stock markets. You may have heard people talk about equity in a property. If you own a home that is worth £300,000 and you owe £50,000 on the mortgage, you have £250,000 of equity in the property.