Five plus points of investing in shares

Fsp Invest, 20 Jan. 2014

Tags: shares, what is a share, investing in shares, advantages of shares, why invest in shares, investing, investment, stock market, definition of a share



If you’re going to buy shares, you’re going to have to know exactly what a share is and what it entitles you to. What makes investors invest in shares in the first place? There are numerous reasons why. Read on to uncover five advantages of investing in shares…



Before you can even think about investing on any share on the stock market, you need to know exactly what a share is, Gareth Stokes in Fear, Greed and the Stock Market explains…

What is a share?

A share is a portion of a company. You can buy and sell it on a stock exchange, or by other agreement. Each share gives you proportional voting rights to you as a shareholder. And it entitles you to a proportional share in the profits of the company.

The majority of shares you can buy and sell on the market are ‘ordinary’ shares. Ordinary shares are the most common type of stock. (There are also other shares called preference shares.)

The characteristics of shares

Shares are popular with investors because they have the following advantages:
  • They have no maturity date... These shares exist in perpetuity. This means you can pass them on to your heirs or sell them at any time.
  • You, the ordinary shareholder, have a proportional claim to the income and assets of the company in which you hold shares after the company has met all obligations to creditors and preference shareholders.
  • The company can’t dilute your share in the company. If the company in question chooses to issue more shares to raise additional funding, they have to offer you the first ‘right’ to take up more shares in the same proportion as your current ownership.
  • You can’t lose more than you’ve invested.
  • You have the right to vote on various resolutions at company annual general meetings (AGMs).
So there you have it, the five plus points of investing in shares.


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