We've heard of equity a lot, especially during a real estate transaction.

But what does equity really mean and why is it important?

What Is Equity?

Equity can refer to different concepts depending on the context in which it is used. In finance and business, equity usually refers to the ownership interest that shareholders have in a company.

Equity represents a portion of a company's assets that the shareholders own after all liabilities have been paid off. This ownership interest is represented by shares of stock, which can be bought and sold on stock exchanges.

In the context of social justice and equality, equity refers to the fair distribution of resources, opportunities, and benefits to all members of society, regardless of their background or circumstances. It seeks to address historical and systemic inequalities and create a level playing field for everyone. 

This can involve policies and actions that address discrimination, promote diversity and inclusion, and ensure that everyone has equal access to education, healthcare, and other resources.

Why Is Equity Important?

Equity is important for several reasons, both in the context of finance and social justice:

In finance, equity represents the ownership interest that shareholders have in a company. This ownership gives shareholders the right to vote on important corporate decisions, such as the appointment of board members and major business transactions. It also entitles them to a share of the company's profits, usually in the form of dividends or capital gains. This can provide investors with a source of income and help to build long-term wealth.

Equity is also important in the context of social justice because it seeks to ensure that all members of a society have equal access to resources, opportunities, and benefits. This can help to address historical and systemic inequalities that have disadvantaged certain groups of people based on their race, gender, socioeconomic status, or other factors. By promoting equity, societies can work towards creating a more just and fair society where everyone has an equal chance to succeed.

Equity can also promote economic growth by creating a level playing field for businesses and individuals. By ensuring that everyone has equal access to resources and opportunities, innovation and entrepreneurship can thrive, leading to increased productivity and economic growth.

Overall, equity is important because it helps to create a fairer and more just society, while also promoting economic growth and providing individuals with opportunities to succeed.