Shares, Stock or Equity mean exactly the same thing. Investing In Stocks refers to a small
part in the possession of a company/company concern. Stocks are classified into
the inclination Stocks, viz, the average Stocks and two. Common Stocks capital
is the base of any business’s fiscal construction. It's called equity share
capital.
Inclination investors as the name suggests are the first to purchase Stocks before others; they're also the first are likely to get refunds and to receive dividends first incase the firm goes broke. The inclination investor, unlike the common investor has fixed dividends, not or whether the firm made enormous gains.
Inclination investors as the name suggests are the first to purchase Stocks before others; they're also the first are likely to get refunds and to receive dividends first incase the firm goes broke. The inclination investor, unlike the common investor has fixed dividends, not or whether the firm made enormous gains.
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| Pros And Cons Of Investing In Stocks |
Advantages Of Investing In Stocks
There are several advantages derived from Investment In Stocks. Below are some
of them:
1. Inflation rate is better than commercial banks interest rate but lower than equity price appreciation.
2. You're shielded from the eyes of the people. Except you tell him or her nobody understands your worth. In other investments, individuals can readily examine the assets of the company or your property (real estate) and come up with approximate worth of it.
3. The rate of growth is way beyond the bank rate of interest.
4. Dividend: This is cash benefit given to investors as part of the gain made by the firm at the end of each financial year. It's declared at the annual general meeting (AGM) of the business. The bigger the units of your shareholding, the more cash you receive at the end of each financial year. There are businesses that have annual dividend policy. Your financial adviser should have the capacity to tell some of them to you.
5. Bonus problems: This is free shares given to existing stockholders of an organization. Occasionally, firm declares bonus rather than both or dividend. In the third quarter of the year 2007, for example, First Bank of Nigeria declared one-for one bonus. This means an unit. For instance, a guy who holds 100,000 units formerly will given an added 100,000 units free after the announcement of the First Bank bonus making the values of his shares 200,000 components.
6. Capital appreciation: Cost of Stocks move down or up reacting to the forces of supply and demand. For example, few months ago there was a high demand of the shares of Benue Cement Company of Nigeria which traded for about N6.00 per share. As a result of tight nature of it and the great performance of the firm, an unit of it now costs about N 48.oo This suggests that there's around 700% increment in the value of the stock. If you'd purchased N50, 000 units of the shares at N6.00 per share, it means that you spent 300,000.00 purchasing the shares. Now, that it costs N48.00 per share, should you be to self your shares, your returns would be 48x50,000,which is equivalent to 2.4 million naira. So your capital has appreciated from N300, 000.00 to 2.4 million naira. Really stock company has the potential of making you a millionaire.
1. Inflation rate is better than commercial banks interest rate but lower than equity price appreciation.
2. You're shielded from the eyes of the people. Except you tell him or her nobody understands your worth. In other investments, individuals can readily examine the assets of the company or your property (real estate) and come up with approximate worth of it.
3. The rate of growth is way beyond the bank rate of interest.
4. Dividend: This is cash benefit given to investors as part of the gain made by the firm at the end of each financial year. It's declared at the annual general meeting (AGM) of the business. The bigger the units of your shareholding, the more cash you receive at the end of each financial year. There are businesses that have annual dividend policy. Your financial adviser should have the capacity to tell some of them to you.
5. Bonus problems: This is free shares given to existing stockholders of an organization. Occasionally, firm declares bonus rather than both or dividend. In the third quarter of the year 2007, for example, First Bank of Nigeria declared one-for one bonus. This means an unit. For instance, a guy who holds 100,000 units formerly will given an added 100,000 units free after the announcement of the First Bank bonus making the values of his shares 200,000 components.
6. Capital appreciation: Cost of Stocks move down or up reacting to the forces of supply and demand. For example, few months ago there was a high demand of the shares of Benue Cement Company of Nigeria which traded for about N6.00 per share. As a result of tight nature of it and the great performance of the firm, an unit of it now costs about N 48.oo This suggests that there's around 700% increment in the value of the stock. If you'd purchased N50, 000 units of the shares at N6.00 per share, it means that you spent 300,000.00 purchasing the shares. Now, that it costs N48.00 per share, should you be to self your shares, your returns would be 48x50,000,which is equivalent to 2.4 million naira. So your capital has appreciated from N300, 000.00 to 2.4 million naira. Really stock company has the potential of making you a millionaire.
Disadvantages Of Investing In Stocks
The advantages of Investing In Stocks are many but there aren't many pitfalls
to avoid. Included in these are:
1. Crash in share prices: Due to one reason or the other, occasionally share prices fall so much. A discerning investor should understand what to do at any point in time.
2. Occasionally businesses go into liquidation thus eroding the investments of common investors. For instance, some banks in Nigeria that didn't meet up with the N25 billion minimum capitals as directed by the central Bank of Nigeria (CBN) perished with investors’ cash. If you consider it significant to you you must be alert to observe over your investment.
3. Deceptive stock brokers: some stockbrokers are not faithful to their customers. They may accumulate your cash when there's perceived advice the shares of a specific business is a superb one and instead of making the trades in your name may divert the cash for their selfish interest, may be use it to make their own investments. When her novel has closed, they may telephone you for refund or may embezzle your money like that. You must be cautious in choosing your stockbroker.
1. Crash in share prices: Due to one reason or the other, occasionally share prices fall so much. A discerning investor should understand what to do at any point in time.
2. Occasionally businesses go into liquidation thus eroding the investments of common investors. For instance, some banks in Nigeria that didn't meet up with the N25 billion minimum capitals as directed by the central Bank of Nigeria (CBN) perished with investors’ cash. If you consider it significant to you you must be alert to observe over your investment.
3. Deceptive stock brokers: some stockbrokers are not faithful to their customers. They may accumulate your cash when there's perceived advice the shares of a specific business is a superb one and instead of making the trades in your name may divert the cash for their selfish interest, may be use it to make their own investments. When her novel has closed, they may telephone you for refund or may embezzle your money like that. You must be cautious in choosing your stockbroker.
As you can see, there are more advantages than disadvantages by Investing In Stocks.
