Advantages of investment in shares, Finance Basics

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.

Posted Date: 2/1/2013 12:53:43 AM | Location : United States







Related Discussions:- Advantages of investment in shares, Assignment Help, Ask Question on Advantages of investment in shares, Get Answer, Expert's Help, Advantages of investment in shares Discussions

Write discussion on Advantages of investment in shares
Your posts are moderated
Related Questions

Example of Miller-Orr Model XYZ's management has put the minimum cash balance to be equivalent to Sh.10, 000. The standard deviation of daily cash flow is of Sh.2, 500 and the

Constant payout ratio 1. This is whereas the firm will pay a fixed dividend rate as like 40 percent of earnings. The DPS would consequently fluctuate as the earnings per share

What are the financial intermediaries? Financial Intermediaries: a. Mutual funds b. Pension funds c. Life insurance companies d. Banks

Suppose an entrepreneur owns a firm which has two production opportunities. Technology A generates an output (net profit) of 10 in state 1, an output of 20 in state 2, and an outpu


Require  the relevant authoritative literature on the lower- of- cost- or- market rule for valuing inventory using the FASB's Codification Research System. Clarify the circumstance


Cost of Finance - Capital Structure This is the price the company pays to retail and acquire finance. To get finance a company will pay implicit costs that are commonly recogn

Tarniwala and Dealer in Non-cleared Securities Tarniwala: He/she is a specialist or jobber in selected shares. He/she makes market i.e. provide continuity to dealings. They