Should I buy ordinary or preference shares?

Fsp Invest, 09 Dec. 2013

Tags: ordinary share, preference share, ordinary shares, preference shares, should i buy ordinary or preference shares



When you buy a company’s stocks, you should consider whether you’d like to buy ordinary or preference shares.

You see, this decision will affect you financially.

Let’s take a closer look at how.

The difference between ordinary and preference shares
An ordinary share is any share that means you have ownership in a company. 
 
But an ordinary share doesn’t have a set dividend attached to it. 
 
Ordinary shares give shareholders the right to vote at shareholder meetings. 
 
They have a say in what happens in the company. Because they partly own the company in question. 
 
But… Ordinary shareholders will get their dividends payments AFTER preferred shareholders do. 
 
The same will happen if the company dissolves… 
 
Ordinary shareholders are last in line to get their money. 
 
Preference shares on the other hand, carry a fixed dividend but NO voting rights. 
 
In other words if you hold preference shares you don’t actually own part of the company!
 
So which should I buy—ordinary or preference shares
You see, only ordinary shares give you actual ownership of the company!
 
And this comes with higher expected returns, BUT also a higher risk… 
 
But preference shares give you more security. 
 
So whether you should buy ordinary or preference shares depends entirely on your situation and risk preference. 
 
If you’re not keen on risk, stick to preference shares

Related QA

Pic
d.c.heger asked:
MY QUESTION IS – I bought Bitcoin & Etherium some time ago – at first they grew nicely but now they are lower than what I paid for them. Should I [read more]
Published at 04 Apr. 2018 in: Investing 5 shares due to rocket 1 Answer
Pic
kavesh.maharaj.73 asked:
Hi Josh. I would like some advice on TFSA. I can get an interest rate of 7.8% nominal at a bank if I invest the R33k upfront in a fixed deposit [read more]
Published at 19 Mar. 2018 in: Investing Tax free savings vehicle 2 answers
Pic
kavesh.maharaj.73 asked:
Hi Josh Quantum wants to buy back shares from shall investors at what I think is a low price of around R3.86. You tipped the share in February [read more]
Published at 14 Mar. 2018 in: Investing Real wealth 5 answers
Pic
elizastrydom asked:
Hi Timon I am interested in registering for your Red Hot Storm Trader service. I am already a Red Hot Penny Shares investor. My question is [read more]
Published at 28 Feb. 2018 in: Investing Trading platform and broker 1 Answer
Pic
ManuE asked:
I have an interest in investing in Bitcoin, I just don't know how. If I buy Bitcoin with R15 000, how much can make (Return On Investment)? [read more]
Published at 25 Feb. 2018 in: Investing Investment 1 Answer


Latest:

Comments
0 comments



 
 


Youtube Twitter Facebook

Connect with us:    

POPULAR TOPICS
  • Accelerated Investor
  • Accessories
  • Accountancy
  • Accountancy services