Company Shares: What Are They and Why Should You Hold Them?
If you are looking to maximise gains on the stock market, it is essential to first be familiar with its different terms. This article will explain in detail the meaning of the company’s shares and the benefits of holding them.
What are the shares of a company?
A share is a unit of a company’s total capital that is traded on the stock market. When you buy the shares of a company, you become a shareholder of the said company. It is a representation of your ownership of the business. Thus, if the share prices rise, your shareholding value increases.
The most common type of shares issued by a company is equity shares. Equity shares or ordinary shares are the ones you trade actively on the stock exchange. They come with voting rights as well as entitlement to dividends. However, they receive dividends only after preferred shareholders.
Benefits of holding the shares of the company
Now that we understand the meaning of shares of the company, let’s know the benefits of holding them.
● Capital growth
When you invest in a company, you are investing in its future growth. When the company performs well, its share prices will rise and generate higher returns for you. Thus, you can sell the share at a higher price at that time and earn profits.
● Dividend income
Owning shares of the company entitles you to dividend income as well. As a result, the more shares you own and the longer you hold them, the more dividends you will receive.
● Limited liability
When you invest in shares of the company, you are entitled to profits. However, if the company goes bankrupt, you won’t be personally liable to reimburse the loss.
That said, you can still face losses when trading on the stock market. You can offset these risks with an Indian discount broker that offers its customers free research and advisory services.
How can you start trading stocks?
The stock exchange is a marketplace for trading different shares of a company. You can’t begin trading directly on the stock exchange. You need a stockbroker registered with SEBI.
So first and foremost, research and find the best stockbroker to trade with. Next, open a Demat account with them.https://asthatrade.com/open-demat-account
Astha Trade provides competitive brokerage rates enabling higher margins for traders. It provides easy to use trading apps like AsthaTrade Flow and Aero. It also has the Pay Later feature for investors to make long-term investments at lowest interest costs. It has a robust system, which has been established in the past 20 years to save the interest of the investors from any black swan event e.g. when crude oil became negative, none of the Astha Trade clients suffered any loss.
In a nutshell
Corporations can raise money for their operations by selling shares. Shareholders, too, can maximise their profits by investing wisely in the stock market.
Choosing a broker depends on your investment goals, financial needs, knowledge, budget, etc. With strong market competition, you can find multiple platforms offering the best services with the lowest brokerage commissions.