When considering investing in the stock market, the idea of buying shares is often the first that comes to mind. This is explained by the fact that the stock market is perceived as the very heart of stock market investing. But do you know everything there is to know about stocks?
What is a share? What are the different types of shares that exist? For what reasons does a company issue shares? Which markets allow you to buy a company’s securities? Who can buy and sell shares? What differences exist between a share and a bond? What are the performances of shares? How to choose your shares when you want to invest in the stock market? What is the taxation of shares? Discover all our explanations on the Stock Market and shares in video and within our 2026 guide on stocks in the stock market.
Are you ready to take action? In video
What is a share?
A share represents a portion of the company’s capital.
Simple definition: a share is somewhat the ownership title of a portion of the company that issued it. The portion that a partner holds in the company is proportional to the number of shares of that company that they own.
Clémence’s explanation:
To better understand this mechanism, imagine a large house. This house represents the capital of a company. It has a certain number of square meters. Each share is a square meter. The more square meters (shares) you hold, the larger your part of the house (the total capital). If the company, through a capital increase, issues new shares, it enlarges the house by creating new rooms. These rooms can be purchased either by existing shareholders or by new investors wishing to become shareholders of this company.
When you buy a share, you become a shareholder of the company. You then own a part of the company’s equity. Consequently, the shareholder has a right to the company’s assets and to its profits.
What are the different types of shares? Focus on ordinary shares and preferred shares
There are two main types of shares:
- ordinary shares, the most common, which give their holder the right to vote at shareholder meetings and to receive possible dividends;
- preferred shares, which do not confer voting rights at meetings but give their holder a pre-emptive right over ordinary shareholders, meaning that in the event of the company’s bankruptcy during liquidation, they will be compensated before ordinary shareholders.
Why does a company issue shares?
Issuing shares is a way for a company to raise funds. Indeed, to raise capital, a company can traditionally proceed in three different ways:
- borrowing money from a bank;
- borrowing money directly from investors on the financial markets (bond issuance);
- selling portions of its capital to investors (share issuance).
Many reasons can lead a company to issue shares. A company may choose to sell portions of its capital:
- to expand internationally;
- to launch a research and development (R&D) project;
- to hire new employees;
- to acquire a competitor;
- to start a new line of business.
Stock: what are the primary market and the secondary market?
A company, when it sells parts of its capital to investors to raise funds, thus issues shares.
Two scenarios exist:
- Initial Public Offering (IPO): the company lists its capital on the stock market, on the so-called “primary” market, i.e., the market for new shares. This term stands for “Initial Public Offering” and is widely used by the specialized press.
- Capital increase: a company already listed on the stock market, which needs money, chooses to issue new shares. It will sell them, as at its IPO, on the primary market. This decision is taken at an extraordinary general meeting.
The primary market obviously is not the only one. You can completely buy shares from someone other than the issuing company. Once a company has been listed on the stock market, its shares can indeed be resold on the “secondary” market. Simply put, it is the market for second-hand shares.
It is also possible, though rarer, to buy shares already issued over the counter (OTC), i.e., directly from someone who wants to sell. This type of operation is mainly used by institutional traders.
Investing in the stock market is therefore about buying shares of a listed company.
What is the stock market? Discover this marketplace where shares are bought and sold
The stock market is the intangible place where shares are bought and sold. You could say it is a marketplace where, for money, shares of companies are exchanged.
In France, shares are traded continuously, across five sessions per week, from Monday to Friday, from 9:00 to 17:30. Between 7:15 and 9:00 there is what is called pre-opening.
The share of the same company can be listed on several stock exchanges. You can thus find Tesla on Nasdaq, but also on the Milan Stock Exchange, the Frankfurt Stock Exchange, and even on Euronext Paris in euros. These are secondary quotes; the main market remains Nasdaq.
Total Energies has recently generated a lot of chatter for its listing on the American exchanges. This is a so-called cross-listing; the Total Energies share has been available on the Paris Stock Exchange and the New York Stock Exchange since December 8, 2025.
Another example, the Coty share, already listed on the NYSE, was introduced in September 2023 on Euronext Paris.
Comment by Clémence:
Before buying a stock on the stock market, always verify that you are indeed purchasing the right product. The simplest reflex is to check the ISIN code (the unique identifier of the security). For example, the Tesla share has the ISIN US88160R1014. If you find this same code on another exchange (Nasdaq, Frankfurt, Xetra, etc.), you are indeed buying the correct stock, simply traded elsewhere (this is a secondary listing). Conversely, if the ISIN is different, it is a different product (certificate, derivative, etc.) which does not necessarily confer the same rights.
To remember:
- ✔️ same ISIN = same stock
- ❌ Different ISIN = different product
This point is essential to ensure you receive dividends, hold a real stake in the capital, and, in some cases, benefit from voting rights.
Stock vs bond: what are the differences between these instruments?
Bonds and shares are two types of financial products used by investors to grow their capital. But they are two very different products.
Shares are ownership titles in a company whereas bonds are debt titles of a company.
The owner of a share holds a portion of the company’s capital and becomes a partner. The share entitles them to a portion of future profits and a voting right at general meetings. For the holder of a bond, they hold a portion of the company’s debt and become a creditor of the company or the state that issued it.
It is generally more remunerative to hold a share than a bond. However, the creditor takes less risk. Note that the bondholder has a major advantage over the shareholder: in case of the company’s bankruptcy, the bondholder will be repaid before the shareholder. Remember, however, that the bondholder has no right to the company’s profits.
There are also convertible bonds, which allow, under certain conditions, to convert the bonds into shares.
In conclusion, it is interesting to note that the price mechanics of bonds and shares differ greatly depending on central banks’ monetary policy and interest rates. A drop in rates is generally considered favorable for stock markets, while it hurts bond yields. To learn more, please read our guide on bonds.
What are fractional shares?
It is also possible to buy fractions of shares, a solution increasingly offered by new online brokers to make stock investing more accessible. Instead of buying a whole share, an investor can buy only a part, which is especially interesting for high-priced stocks. Concretely, the broker pools several orders and holds the share in its name, while distributing proportional rights among investors according to their stake.
In some cases, these may also be derivative products that replicate the stock’s performance and pay dividends.
Unlike directly held shares, fractional shares do not always allow voting at a shareholders’ meeting, but they generally grant pro rata dividends. This approach thus enables portfolio diversification with a smaller capital, without waiting to accumulate enough to buy a full share.
Who can buy and sell stocks on the stock market?
The stock market is open to everyone and anyone can buy or sell shares: individuals, of course, but also banks, insurance companies, pension funds, and also companies that can buy or sell shares of other companies.
In some cases, companies may buy back their own shares. This way, the company reduces the number of shares outstanding. This process aims to increase value for the remaining shareholders after the buyback.
How to buy a stock? 4 key steps
1. Choose the stockbroker to open an account with
To buy a stock, the investor must first open an account with one of the best stockbrokers such as Degiro, eToro, Trade Republic, Freedom24 or XTB, or go through their bank (online bank or traditional bank).
2. Select the tax wrapper that will be used to buy stocks
There are many tax wrappers for investing in stocks: you can invest with a custody account, with a PEA, but also more confidential wrappers like the PEA PME, or the PEA Jeunes. Be careful to choose the best PEA and the best custody account from the outset to benefit from a wide range of assets with reasonable fees and a set of tools and services suited to your investor profile.
3. Determine which stock to buy
Fundamental analysis and technical analysis will help you determine which stocks are the most interesting in the market. Depending on your investor profile, you may lean more toward value, growth, or dividend stocks.
You can rely on analyses and top stocks from specialized media such as Café de la Bourse, which identifies for you the best PEA stocks, the best PEA-PME stocks, French stocks with strong rebound potential, or the wealthiest French companies.
4. Place a stock order
Once your custody account or your PEA is opened, you will need to place an order. Concretely, this means placing a buy (or sell) order on a given security, specifying the number of shares you want to buy (or sell), at what price, paying in cash or using the deferred settlement service or SRD (this option is only possible on a custody account and for certain stocks, and it carries higher risk).
Note that you can also hold a stock in nominative form, and in this case the titles are directly registered and managed by the issuing company. The shareholder is then required to open an account with each listed company in which they hold shares, whereas bearer holding allows you to consolidate all your investments on one or a few platforms (custody account, PEA, etc.).
Note: the listed company that employs you may also grant you shares as a reward for your work or as a welcome gift when signing the contract.
The operation by which a company gives its own shares to its employees or executives is called a free allocation of shares.
The company may also offer stock options to its employees, which give you the opportunity to acquire the company’s shares under favorable conditions.
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How to make money with stocks?
The investor who holds stocks can make money in several ways.
How to earn money from a stock’s dividend?
On the one hand, a stock can pay a dividend, and in that case the holder of the security receives, every year or several times a year, an amount corresponding to the stock’s yield.
Since the Covid crisis and the year 2020 which was a zero-year for dividends, many companies did not pay, dividends are growing steadily worldwide, and especially in Europe.
In 2025, American companies continue to raise their dividends, with an increase of about 7% to reach nearly $784 billion.
In France, CAC 40 companies are expected to pay around €98 billion in dividends and share buybacks in 2025. France thus confirms its position among the largest dividend distributors in Europe. French groups remain particularly generous, despite sectoral disparities linked to annual results.
Estimates for 2026 dividends remain limited, but several projections exist for Europe. S&P Global anticipates dividends around €501.6 billion, a rise of about 3% compared to 2025. Allianz provides a similar estimate, around €496 billion, confirming continued growth. However, no solid public data yet allows for precise evaluation of global or American dividends in 2026, as analysts focus more on profits and distribution policies than on consolidated amounts.
Note that not all companies pay dividends. They may do so but are by no means obligated to. They can retain this portion of profits to fund their development. That does not mean the shareholder will not make money by investing in such a company.
How to earn money from the capital gain of a stock?
Indeed, there is a second way for a shareholder to profit from a stock: realize a capital gain when selling. This means that the shareholder sold the stock at a higher price than what they purchased it for (the stock price rose). While you hold the title, a rise in the stock price means the capital gain is latent. It becomes real when the stock is sold and the amounts are received. Of course, stock investors also face the risk of capital loss, which occurs when the stock is sold for less than its purchase price.
How to earn money by lending shares?
Finally, it is also possible to earn money by lending your shares. The lending of shares is made possible by certain stockbrokers, notably new online brokers, and allows you to earn a remuneration in exchange for lending your securities to a third party, with a guarantee. This practice, which enables short selling and enhances market liquidity, is an additional way for stockholders to earn money from their holdings.
What is stock market performance?
A stock can bring in a lot of money, but it can also cause a lot of losses. Stock prices on the market fluctuate up and down according to supply and demand.
Among the stocks that have shown notable performances in recent years, one can cite Nvidia, whose share price rose by more than 104% in 1 year (and 1,322% in 5 years), or Societe Generale, which saw its price rise 64% in 1 year and jump more than 200% in 5 years. But a company can also see its stock price plunge, as with Orpea, which lost nearly 99.79% of its value in 5 years, or Worldline, which fell by more than 98.68% in 5 years.
It is strongly advised not to invest all your money in a single stock. A numeric, geographic, and sector diversification should be put in place within a stock portfolio. It is therefore more reliable to judge the performance of stocks by reference to major stock indices rather than by selecting after the fact the titles with the most extreme variations.
Beyond the spectacular performances of some stocks, one should expect an average return of around +7% to +12% per year for stocks. The average performance delivered by the CAC 40 each year between 2005 and 2025, excluding dividends, is 5.5%.
If we take the MSCI World since its creation in 1987, this global index comprises thousands of stocks from around the world, and the annualized return is around 8.47%, which would still have allowed an investor to multiply their investment by more than 17 from 1987 to 2024. This global index posted an exceptionally high performance in 2024 of +26%, and for 2025 the MSCI World index performance was over +7.86%.
Nasdaq, for its part, also fluctuates around 9% to 10% annualized performance (more than 50% in 2023, 28.6% in 2024 and 21% in 2025), while CAC 40 is around 9% (+16.5% in 2023 and +9.6% in 2025, but -2.1% in 2024).
Long-term investing in stocks thus proves rewarding, and stocks are the most performing asset class when one has a horizon of several decades.
In the stock market, nothing is truer than the adage that time is money, because investing for the long term significantly increases the probability of coming out ahead and generating meaningful performance.
How to choose stocks in the stock market? Café de la Bourse advice
To properly choose stocks in the stock market and do your own stock picking, it is essential to know your investor profile, particularly your risk tolerance, but also your objectives and investment horizon, to be clear about your knowledge and skills in the various sectors and geographic areas, and to have a solid grasp of basic economics and accounting concepts to be able to perform fundamental analysis of a stock, and even technical analysis to choose the best moment to position yourself.
It is important to keep an eye on economic indicators and interest rates, as these influence the market; stay informed about financial and economic news.
It is also possible to choose stocks based on your personal convictions or your outlook for the future. If you think, for example, that geopolitical tensions and climate and health issues will be major concerns, you can steer your investment choices according to your beliefs.
You will need to choose between value, growth or dividend strategies, or even opt to position yourself on investment themes. It is also possible, as part of diversification, to allocate a portion of your portfolio to each of these investment strategies.
Clémence’s view:
To select your own stocks, you can find on Café de la Bourse numerous stock analyses and a wide variety of top stocks such as our Top 3 CAC 40 stocks in 2025, or our article featuring 3 values whose stock prices could explode in 2026.
How to build a stock portfolio?
The key is to build a diversified, balanced portfolio that allows you to generate capital gains over the long term, perhaps by rotating holdings according to market circumstances. But you can also opt for a buy-and-hold portfolio to grow capital over time with regular contributions.
If you prefer not to select stocks yourself due to lack of time or expertise, you can still invest in the stock market. You can choose to invest in major indices with ETFs, or invest in actively managed mutual funds (OPCVM). Be mindful of the fees of these funds, which do not always outperform their reference index. Finally, you can also opt for discretionary management of your life insurance or your PEA, for example. In this case, a team of fund managers will perform all the arbitrage within your envelope based on your risk profile, your investment horizon, and market conditions.
What is the taxation of stocks in 2026?
In France, gains on securities are taxed at the flat tax of 31.4% or according to the income tax bracket plus 18.6% social contributions if that is more advantageous for you. Stock gains are therefore taxed this way when you hold your titles in bearer form or on a custody account.
However, other wrappers allow for tax advantages for your stock investments. For example, if you hold your stocks in a PEA, you benefit from tax exemption on capital gains and only social contributions are due if you have held the plan for more than 5 years. Note that during these 5 years, to benefit from the tax advantage, no withdrawal can be made from the PEA. But you can still sell and buy shares. You simply need to keep the proceeds from a sale in the PEA’s cash account.
It is also possible, though much less common, to buy stocks directly from the unit-linked supports of a life insurance policy. In this case, you can benefit from the tax advantages of life insurance, namely, after 8 years of holding, taxation drops to 24.7% (instead of 31.4% with the flat tax), provided that the total value of all contracts does not exceed €150,000 for a single person and €300,000 for a couple. Note also that beyond 8 years of holding the contract, you benefit from an annual allowance on gains from withdrawals, €4,600 for a single person and €9,200 for a couple, regardless of whether you choose IRPP (income tax) or prélèvement (withholding tax).
Some questions about stocks in the stock market?
You can buy a stock by placing a stock order with your broker such as Bourse Direct or your bank such as BoursoBank (formerly Boursorama Bank), for example, after you have opened in advance a wrapper to hold your titles: PEA, PEA-PME, PEA Jeunes or custody account for stocks outside the EU and for sophisticated investment strategies.
A shareholder can hold their stocks either in nominative form, in which case the titles are directly managed by the issuing company which handles actions such as dividend payments or the allocation of new shares, for example; or bearer form, which means only the financial intermediary (broker or bank) knows the owner’s identity. This is the most common case, that of shares held via a custody account or a PEA.
There are two main ways to make money with a stock. First, the stock’s yield is related to the dividend paid to its shareholders. Note that companies may choose not to pay dividends. The other way to make money with stock investment is to realize a capital gain, i.e., sell a stock for more than it was purchased.
All our information is, by nature, generic. It does not take into account your personal situation and does not constitute personalized recommendations for the execution of transactions and cannot be equated with investment advice. The reader is solely responsible for using the information provided, and Cafedelabourse.com cannot be held liable. Cafedelabourse.com’s publisher cannot be held responsible for any error, omission, or unsuitable investment.
