By Investing in shares in a public company, which has registration in a stock exchange an individual can get a share in the future income and value of the company. The capital of the company’s business is divided into a large number of equal parts called shares.
The people who buy these are the shareholders of the company. Shares represent ownership in a company. It is also called as equity and preference shares. Investing in shares, you become a part owner of the company and have the share in future value and profits.
1. Your share value increases as value of the company increases.
2. Profits to share to the investors known as dividends. The income payments are the dividends. They do not take this money as reinvestment for the company.
3. These dividends are taxed effective.
4. If shares are held for more than 12 months a 50% discount on any capital gains tax payable.
5. Capital gains will be yours when you sell at a price higher than the price you actually purchased the shares at.
Since the shares are small parcels of different companies they can generate high returns and increase the value or decrease the original value of the company. Shares are generally best for investors having a long term saving idea, longer investment period and high returns for long-term investments. The performance that the company has grown is shown in the profits. Future prospects of the investment holders and the company will increase more. If there is a capital loss it is by the shareholders. This varies from share to share depending upon the company.
The prices of the shares vary from day to day and it may go up or down on the same day. Due to the rise and fall of the economic confidence or changes in a particular industry the increase or decrease in value occurs in the share market. When you make the share investments as long term investment you are sure to secure your future. If the requirement of a high amount of cash occurs all you have to do is sell your shares and get all the liquidity that you need.
Share trading agencies help in selling or purchasing the shares from the identifiable companies through demat accounts. Preferential and equity shares are issued by the company’s at par and issue price is the par value or the face value of the share and the number of shares multiplied by the face value is the stock held by the shareholder. Every day the exchange quotes the market price and share brokers and mediators will become the causes for the odd fluctuations in the market. Discount sale occurs when market price is less than the face value. The share is said to be sold at premium when the market price is higher than the face value. Dividend given by the company is expressed in % .The shareholders can check their investments the daily i.e., Monday to Friday through newspapers, TV media and Internet.
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