Will a small investment in a company net a worthwhile gain?
If the shares rise in value 50% over the next few years, you will have the same return that I would see if I bought 100 or 1000 shares.  The only issue with a small purchase is that even a $5 commission is a high percent. But the rest of the math is the same. If you bought 5 shares @ $20 each that would cost you $100 plus brokerage. Even if your brokerage was only $10 in and out, your shares would have to go up 20% just for you to break even. You don't make a profit until you sell, so just for you to break even your shares need to go up to $24 per share. Because your share holding would be so small the brokerage, even the cheapest around, would end up being a large percentage cost of any overall profits. If instead you had bought 500 shares at $20, being $1000, the $20 brokerage (in and out) only represents 2% instead of 20%. This is called economies of scale.
Private Equity is simply some type of an investment company, which is owned in a way not accessible to the public. ie: Warren Buffet runs Berkshire Hatheway, which is an investment company which itself is traded on the New York Stock Exchange. This means that anyone can buy shares in the company, and own a small fraction of it. If Warren Buffet owned all the shares of Berkshire Hatheway, it would be a Private Equity company. Note that 'Equity' refers to the ownership of the company itself; a private investment company may simply buy Bonds (which are a form of Debt), in which case, they would not be technically considered a 'Private Equity' company. A Hedge Fund is a very broad term which I don't believe has significant meaning. Technically, it means something along the lines of an investment fund (either public or private) which attempts to hedge the risks of its portfolio, by carefully considering what type of investments it purchased. This refers back to the meaning of 'hedge', ie: 'hedging your bets'. In my opinion, 'Hedge Fund' is not meaningfully different from 'investment fund' or other similar terms. It is just the most popular way to refer to this type of industry at the present time.  You can see the trend of using the term 'investment fund' vs 'hedge fund' using this link: https://trends.google.com/trends/explore?date=all&q=hedge%20fund,investment%20fund Note that the high-point of the use of 'hedge fund' occurred on October 2008, right at the peak of the global financial crisis. The term evokes a certain image of 'high finance' / 'wall-street types' that may exploit various situations (such as tax legislation, or 'secret information') for their own gain. Without a clear definition, however, it is a term without much meaning. If you do a similar comparison between 'hedge fund' and 'private equity', you can see that the two correlate very closely; I believe the term 'private equity' is similarly misused to generally refer to 'investment bankers'. However in that case, 'private equity' has a more clear definition on its own merits. A company's Return on Equity (ROE) is its net income divided by its shareholder's equity.  The shareholder's equity is the difference between total assets and total liabilities, and is not dependent on the stock price. What it takes to have a ROE over 100% is to have the income be greater than the equity.  This might happen for a variety of reasons, but one way a high ROE happens is if the shareholder's equity (the divisor) is small, which can occur if past losses have eroded the company's capital (the original invested cash and retained earnings).  If the equity has become a small value, the income for some period might exceed it, and so the ROE would be over 100%. Operating margin is not closely related to ROE.  Although operating income is related to net income, to calculate the margin you divide by sales, which is completely unrelated to shareholder's equity.  So there is no relationship with ROE to be expected.  Operating margin is primarily dependent on market conditions, and can be substantially different in different industries. "The answer to your question depends on what you mean when you say ""growth"".  If you mean a literal increase in the aggregate market capitalization of companies, across the entire market, then, no, this sort of growth is not possible without concomitant economic growth.  The reason why is that the market capitalization of each company is proportional to its gross revenue, and the sum of all revenue from selling ""final goods"" (i.e., things purchased and used by consumers) is, apart from a few technicalities, the definition of GDP.  The exact multiplier might fluctuate up or down depending on investors' expectations about how sales will grow or decline going forward, but in a zero-growth economy this multiplier should be stable over the long run.  It might, however, still fluctuate over the short term, but more about that in a minute.   Note that all of this applies to aggregate growth across all firms.  Individual firms can still grow, of course, but as they must do this by gaining market share from other companies such growth would be balanced by a decline for some other firm.  Also, I've assumed zero net exports (that's one of the ""technicalities"" I mentioned above) because obviously you could have export-driven growth even if the domestic economy were stationary. However, often when people talk about ""growth"" in the market, what they really mean is ""return"".  That is, how much does your investment earn for you.  This isn't really the same thing as growth, but people often think of it that way, particularly in the saving phase of their investing career, when they are reinvesting their returns, and therefore their account balances are growing.  It is possible to have a positive return, averaged across the market, even in a stationary economy.  The reason why is that there are really only two things a firm can do with its net profits.  One possibility is that it could invest it in growing the business.  However, there is not much point in doing that in a stationary economy because by assumption no increase in aggregate consumption (and therefore, in the long run, aggregate production) are possible.  Therefore, firms are left with only the second option, which is to pay them out to investors as dividends.  Those dividends provide a return that is independent of economic growth. Would the stock market still be a good investment in such an economy?  Yes.  Well, sort of.  The rate of return from firms' dividend payouts will depend on investors' demand (in aggregate) for returns on their investments.  Stock prices will rise or fall, causing returns to respectively fall or rise, to find that level.  If your personal desire for returns is lower than the average across the investing public, then the stock market would look like a good investment.  If your desired return is higher than the average, then it will look like a poor investment.  The marginal investor will, of course be indifferent.  The practical upshot of this is that the people who invest in the stock market in this scenario will be precisely the ones for whom the stock market is a good investment, given their personal propensity to save and desire for returns, and so forth. Finally, you mentioned that in your scenario the GDP stagnation is due to declining population.  I am less certain what this means for investment, but my first thought is that you would have a large retired population selling its investments to fund late-life consumption, and you would have a comparatively small (relative to history) working population buying those assets.  This would lead to low asset prices, and therefore high rates of return.  However, that's assuming that retirees need to sell assets to fund their retirement consumption.  If the absolute returns on retirees' assets are large enough to fund their retirement consumption then you would wind up with relatively few sellers, resulting in high prices and therefore relatively low rates of return.  It's not obvious to me which effect would dominate, and so it's hard to say whether or not the resulting returns would look attractive to the working-age population." "Oddly enough, in the USA, there are enough cost and tax savings between buy-and-hold of a static portfolio and buying into a fund that a few brokerages have sprung up around the concept, such as FolioFN, to make it easier for small investors to manage numerous small holdings via fractional shares and no commission window trades. A static buy-and-hold portfolio of stocks can be had for a few dollars per trade.  Buying into a fund involves various annual and one time fees that are quoted as percentages of the investment.  Even 1-2% can be a lot, especially if it is every year.  Typically, a US mutual fund must send out a 1099 tax form to each investor, stating that investors share of the dividends and capital gains for each year. The true impact of this is not obvious until you get a tax bill for gains that you did not enjoy, which can happen when you buy into a fund late in the year that has realized capital gains.  What fund investors sometimes fail to appreciate is that they are taxed both on their own holding period of fund shares and the fund's capital gains distributions determined by the fund's holding period of its investments. For example, if ABC tech fund bought Google stock several years ago for $100/share, and sold it for $500/share in the same year you bought into the ABC fund, then you will receive a ""capital gains distribution"" on your 1099 that will include some dollar amount, which is considered your share of that long-term profit for tax purposes. The amount is not customized for your holding period, capital gains are distributed pro-rata among all current fund shareholders as of the ex-distribution date. Morningstar tracks this as Potential Capital Gains Exposure and so there is a way to check this possibility before investing. Funds who have unsold losers in their portfolio are also affected by these same rules, have been called ""free rides"" because those funds, if they find some winners, will have losers that they can sell simultaneously with the winners to remain tax neutral.  See ""On the Lookout for Tax Traps and Free Riders"", Morningstar, pdf In contrast, buying-and-holding a portfolio does not attract any capital gains taxes until the stocks in the portfolio are sold at a profit.  A fund often is actively managed.  That is, experts will alter the portfolio from time to time or advise the fund to buy or sell particular investments. Note however, that even the experts are required to tell you that ""past performance is no guarantee of future results.""" "We're not ""helping"" the company in a comparable sense to donating money to a non-profit.  As you wrote, investing in a company deals with ownership and in a sense, becoming a part owner of a company, even if it is a minor ownership, indicates that we sense it has some sort of value, whether that's ethical, financial or tangible value.  As investors, we should take responsibility and ensure that our voices are heard when voting occurs (sadly, not too common). EDIT: @thepassiveinvestor makes an excellent point that this paragraph only applies to IPOs: Keep in mind, when we purchase stock in a company, that money is used for business purposes.  It also signals value to the market as well, if enough money or enough investors buy the stock." Yes, but only if they're looking for investors. You would need to contact them directly. Unless you're looking to invest a significant sum, they may not be interested in speaking with you. (Think at least 6 figures, maybe 7 depending on their size and needs). This is otherwise known as being a Venture Capitalist. Some companies don't want additional investors because the capital isn't yet needed and they don't want to give up shares in the profit/control. Alternatively, you could try and figure out which investment groups already have a stake in the company you're interested in. If those companies are publicly traded, you could buy stocks for their company with the expectation that their stock price will increase if the company you know of does well in the long run. Good questions. I can only add that it may be valuable if the company is bought, they may buy the options. Happened to me in previous company. Imagine that a company never distributes any of its profits to its shareholders. The company might invest these profits in the business to grow future profits or it might just keep the money in the bank. Either way, the company is growing in value. But how does that help you as a small investor? If the share price never went up then the market value would become tiny compared to the actual value of the company. At some point another company would see this and put a bid in for the whole company. The shareholders wouldn't sell their shares if the bid didn't reflect the true value of the company. This would mean that your shares would suddenly become much more valuable. So, the reason why the share price goes up over time is to represent the perceived value of the company. As this could be realised either by the distribution of dividends (or a return of capital) to shareholders, or by a bidder buying the whole company, the shares are actually worth something to someone in the market. So the share price will tend to track the value of the company even if dividends are never paid. In the short term a share price reflects sentiment, but over the long term it will tend to track the value of the company as measured by its profitability.