Technology has now made it easier than ever for any person from all walks of life to buy shares online using various devices. Think of the stock market as an auction where for everything you are selling there has to be someone interested or for everything you are buying there has to be someone selling. This means that once you place a BUY ORDER and it matches with a corresponding SELL, you instantly become a SHAREHOLDER.
BUT why bother becoming a SHAREHOLDER?
Here are some benefits of becoming a shareholder in a company;
- Unlike a small business you start and manage on your own, ownership of partial businesses through shares does not require any work on your part (other than research). There are boards and management teams that run the business. So you can still get to benefit from good financial performance while you do not have to show up to work every day.
- As a shareholder, there is the ability to influence decisions in the company. For example, shareholders may have the right to vote on appointing the board members that run a company; and in some companies the shareholders themselves may sit on directive boards. By asserting their right to be kept informed on appropriate developments, investors can influence direction and policy.
- Investors benefit from protection through the obligation of listed companies to disclose information related to their everyday business. Price sensitive information, which has an impact on prices, is published by the exchange in which the company is listed and is available to the public.
- Given that share prices fluctuate, depending on the performance of the companies as well as other developments in the economy, there is a real opportunity for investors to make a profit on the sale of shares. The general principle is to buy low and sell high. These are known as capital gains.
- Shareholders can benefit from dividend payments. These are pay-outs made by a company to its shareholders as a distribution of profits. Dividends are an important portion of the investment return. Companies balance the cash they retain in the business to finance growth and the cash paid to shareholders to reward them for investing.
- Listed shares are liquid investments. When investors want to exit an investment, it is quick and easy to find a buyer. Other assets such as real estate are much more difficult to sell.
- Investing in shares is a good money management approach as it ensures both present and future financial security. Not only does one end up with more money in the bank, one can end up with another income stream. Piggy believes that investing is the only way to achieve both growing wealth and passive income. Here is a tip on how to build assets that can pay for your bills;
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