Advantages of investment in shares, Finance Basics

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Advantages of Investment in Shares

1. Income in form of dividends

When you contain shares of a company then you become a part-owner of such company and hence you will be entitled to obtain a share of the profit of the company that come in form of dividends. In addition, dividends attract an extremely low withholding tax of 5 percent only.

2. Profits from Capital Appreciation

Shares prices change along with time, and hence when prices of provided shares appreciate, shareholders could obtain advantage of this raise and set their shares at a profit.  Capital gains are in US not taxed.

3. Share Certificate can be utilized as Collateral

Share certificate represents a certain amount of assets of the company whether a shareholder has invested. Hence this certificate is a valuable property that is acceptable to much type of financial institutions and banks like security, or collateral against that an investor can obtain a loan.

4. Shares are easily transferable

The process of obtaining or selling shares is fairly easy, inexpensive and swift and thus an investor can liquidate shares at any instant to suit his convenience.

5. Availability of Investment Advice

Whether the stock market may appear complex or to remote many type of people. Positive guidance and advice could be provided through the stockbrokers and other investment advisors. Consequently, an investor can still benefit from trading in shares even by he may not be containing the technical expertise relevant to the stock market.

6. Participating in Company Decisions

By buying shares and hence becoming a part-owner in an enterprise, a shareholder obtains the right to participate in creating decisions about how the company is managed.  Shareholder chooses the directors at the Company's Annual.

Universal meetings, whereof the voting power is determined with the number of shares an investor holds because the usual rules is such one share is equal to single vote.


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