ELI5: Explain Like I'm 5


Equity is like a pie. Everyone who owns a part of the pie (or equity) owns a part of the company. The size of the piece of pie everyone has is based on the amount of money they have invested into the company. The more money you put into the company, the bigger your piece of pie is. If the company makes a profit, everyone who owns a piece of the pie will get a piece of the money. This is why investing in equity is a good way to make money in the long run.