First of all, you must know that shares and stocks mean the same thing. there has been ample confusion amongst the masses regarding this and several questions have been raised about the same. The fact to be noted here is that shares are collectively called stocks. Thus, any time you hear someone says that they own stocks, you must be able to understand on your own that he or she is referring to a number of shares in a number of companies that they have just bought. If you heard someone say that they bought shares, then decipher that they are hinting towards just one particular company. Keep reading ahead to know about the basic features of a company that are very important for you before you invest in them.
- Ownership rights: The most important fact that you need to make a note of is that you own a part of the company. This has no hidden agenda or meaning. You see, whenever you buy a share, it means that you are investing in the company. It is with your money that the company is being able to run itself. Thus, you become one of the key components. You thus can call yourself a part of the owning group. This comes with certain rights such as voting your opinion when it comes to certain issues of importance and also participating in reaping the benefits of the profits.
- Possibility of high profit: Whenever you invest in the shares of a company or the stocks of a number of companies, you become a part of the owning group. But, this ownership is only to the extent of your investment. Thus, if someone has more shares than you in a company, then they have a greater say than compared to you. As the company grows and makes profit, the share prices also increase. That is how you earn and your profits are also increased.
- Element of risk: You must have heard that every coin has a flip side to it or that a story has a number of outcomes if only you change your perspective. Well, similar is the case in case of shares. If you are eligible to make extraordinary profits, then please note that in case the company suffers a loss, then you may also end up suffering personal losses. This is why you must always be aware of the company that you are investing in, its past records as well as its growth possibilities.
- Source of income: Everyone likes to know that they have a steady source of income and do not worry about the future. This role is fulfilled by the shares. As you become a part of the owning group when you invest in their shares, you also get to be a part of earning from the profits that are earned. Though the creditors are paid first, shareholders also get their dividends and bonus shares.
You now have your persona guide to the basic features of shares at your fingertips.