Understanding equity as a form of ownership

There are two ways to give money to a business and expect something back.

The first is lending. The business promises to return your money on a schedule, with interest. You are a creditor. Your upside is fixed. If things go well, you get back exactly what was promised.

The second is ownership. You put money in, and in return, you get a share of the business itself. No fixed promise. No schedule of repayments. If the business grows, your share becomes more valuable. If the business fails, you get whatever is left after every creditor has been paid first, which may be nothing.

When you buy a US equity, any US equity, you are an owner.

This distinction is the foundation of everything else in this chapter.