Stock investment means that you are becoming a potential owner of a company. If a company is a private one, then the owner of the stocks would be a group of people. No one outside the group can become the owner of such a company. On the other hand, if a particular company is a public limited company, then you can buy the stocks and become an individual stockholder. You can buy these stocks from the stockbrokers. There are different types of stocks that a corporation issues; however, the most common among them is the common stock.
When you buy the stock of a particular company, you are staking your claim on the future of that specific company. You will also hold a stake in the investment returns that this company may bring in the future. You are indeed able to get a part of the company’s profit. This, however, also means that you are also associating yourself with the risks associated with this company. If a company liquidates, then it will have to pay all its creditors, and only after that, it will pay to the standard stockholders.
When you are a standard stockholder, then you are also able to enjoy some voting rights. As a shareholder of a particular company, you will also receive dividends. The company pays it to all the shareholders of that specific company. The Board of Directors of the company decide as to how much the company will pay as dividends. They will also determine the amount of money that they will reinvest for the growth of the company.
1. This Is How Stock Investment Can Reward You
Investing in a stock is indeed much higher if you compare it to investing in a bond. If you can hold the stock for a more extended period, then you will be able to get higher returns. Though investing in stock does not guarantee you good returns, however, it is usually seen that if you invest in stock for a more extended period, then you will undoubtedly be able to get a good return.
2. You Can Either Make Investment In Shares Or Grouped Mutual Funds
You can buy individual stocks or mutual funds. A particular employee of a company can also purchase the stocks of his or her own company. This you can also get as a part of the retirement plan. If your company can grow in the future, your money will also be increasing.
There are various options for investing your funds. The important thing, however, is fund diversification. If you can diversify the funds that you have, you will surely be able to earn an excellent income.