- Capital Gains
This is when a share's selling price exceeds its initial purchase price. If the selling price falls beyond the purchase price, you would make a capital loss. Capital Gains are free of tax.
A company may decide to payout a portion of its earnings to shareholders. But companies are not required to pay dividends.
- Rights Issues
The company may extend this privilege to existing shareholders to buy shares at a specified and usually discounted price, usually in proportion to the number of shares already owned.
- Distribution by the company
Shares shall be offered to the holders of existing shares in a manner which would, if the offer was accepted, maintain the relative voting and distribution rights of those shareholders.
Shares quoted on a stock market are generally liquid. Therefore, they can be sold easily and you can get your money back in a few days.
- Higher Returns
In the longer term, shares have ensured a higher return to investors.
- Hedge against inflationShares are a good investment in an inflationary environment, since share prices increase to protect investors from the effects of inflation.
You may also use your shares as collateral against loan facilities to banks.
Saturday, October 10, 2009
Why we should invest in Shares?
Let's see what are the benefits of Investing in Equity