Love it or hate it, the Government's garage sale of state-owned assets is making the sharemarket cool and relevant again. More than 77, first-time investors have become proud company owners through the partial sale of Mighty River Power this month. The rest of the state assets are still on the block, and there's a flurry of other companies coming up for sale soon.

That means now is the perfect time to get up to speed on how this whole sharemarket thing works. That's how much it would cost to buy the smallest possible stake in the company- a single 'share'. Trade Me is divided into precisely ,, bits, so even if you bought of them, you'd still only own roughly a one-millionth stake in the entire business.

It doesn't sound like much, but it means you get to have a say in the way the company's run. More importantly, you also get a cut of the profits. Let's clear up some confusing language - for our purposes, 'stocks', 'equities' and 'shares' all mean the same thing. It's not quite so exciting these days. The old "floor trading" has long since been replaced by phone and electronic trading in most countries.

But a stock exchange is still a bustling hive of activity- not unlike your local flea market. The difference is that the traders are mostly buying and selling companies, rather than home-made jam and knock-off sneakers. New Zealand's very own stock exchange, which is called the NZX, currently has individual companies 'listed' for sale. You can check out the NZX website here.

If you follow the financial news, you'll hear that the sharemarket rose, fell, soared, plummeted, sank, dipped, stalled, rocketed, tanked- or sometimes did nothing at all.

His job involves following the NZX every day and trying to work out what's pushing share prices around. Hardie says the key driver is a company's performance.

If it's making mega-profits, smashing the competition whilst simultaneously finding a cure for cancer, the share price will obviously go through the roof. Companies that trade publicly have to continuously update the market so we know what sort of antics they're getting up to. He says traders keep a keen eye on global political events, changes in industry conditions, competition, regulation, currency movements, economic data and more. If you're a part-owner of a profit-making company, you're entitled to your fair share of the loot.

Hardie says New Zealand is well-known for having companies that pay out particularly healthy dividends. Hardie reckons "rock-solid" dividend-paying companies should be the cornerstone of your share portfolio.

Many investors buy companies with their fingers crossed that the share price will rise, meaning they can sell it for a profit later.

Over the years, most companies' share price will end up higher, so you're likely to get a wee bit of growth on top of your dividend. For people in for the long haul, buying younger companies which haven't actually made a profit yet can make sense too.

But the only way you can get rich quick is by predicting changes in share price ahead of time. Trying to beat the market is also a great way to get poor quick. It's not investing- it's speculation. Back in , a whole lot of Kiwis -possibly your dear old mum and dad- got burnt when the sharemarket took a massive dive. It's been a hard road back, but Hardie sees more people starting to get comfortable with shares again. There's a reason you can earn more from shares than you can in the bank - they're riskier.

A smart investor will take steps to reduce that risk. You wouldn't put all your eggs in one basket by only owning shares. And you wouldn't only own shares in one company. If it unexpectedly collapsed, it would take all your hard-earned cash with it.

The lack of diversity is what concerns authorised financial adviser and author Martin Hawes about investors who have bought Mighty River Power. There's an easier way for small investors to get a much broader selection.

Investing

If you only have a few thousand dollars, you can buy into a share or fund that invested in the entire market on your behalf. You can learn more about these "passive" funds here. But that means you also miss out on all the learning which comes with owning a company directly - even if a few lessons are learnt the hard way. The Government did all the hard yards to make it easy to grab a slice of Mighty River Power.

Normally, you need a stockbroker. A broker will set you up with an account so you can make trades over the internet or by phone.

You can find a full list of brokers here. Some provide bare-bones service for a flat fee, and others offer more help at a higher price. Once you're all set up, you actually need to work out which company you're going to buy. This is not the time to act on a hot tip from a helpful cabbie or some guy down at the pub. That gets you access to all their expertise, research reports, and recommendations for various stocks.

Buying shares certainly isn't for everyone, and deciding whether you should do so goes beyond the scope of this article. To learn more about your investment profile, visit the Sorted website. Aussie bankers drug colleague with valium and laxatives in attempt to discredit him.

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Hunt for water blasters whose mistake contaminated Kaiapoi home with asbestos MP Todd Barclay goes but PM Bill English still trying to find his footing Prince Philip hospitalised as 'precautionary measure' Live: State of Origin II - NSW Blues v Queensland Maroons Sir Paul McCartney confirms one-off NZ show in the lead up to Christmas State Services Commissioner defends embattled health official against 'inappropriate' attacks Body found in Nelson house destroyed by fire Auckland karaoke taxi offers a party on the way to the party Kim Kardashian responds to blackface accusations PM confirms Todd Barclay told him about secret recording What the hell is 'gorpcore' and why will it be all over Glastonbury?

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