Shares/stock investment is very valuable for those who wants to have a good financial future. Like I did mention in my previous post it is muchgood and better to invest when you are young. Let's go through stock and what it really is that makes the rich more richer.
First of all shares or what some peopl term as stock represent ownership of a company. What it means is that, when an individual buys shares in a company, he/she becomes one of it owners or part owner of the company. One who buys shares of a company and is therefore part owner of the company is known as a shareholder. Shareholders choose who runs a company and they take part in decision regarding the company for the success of the company.
Shares are most obviously associated with the stock market. Stock market in simple terms should i say a place where shares are listed and buying and selling of shares take place there. Most businesses issue shares in their company in return for a lump sum investments. This investments may either comes from friends and families. Other businesses an a larger scale issue shares by making it public, offering it to all and not only limited number of people. They do that in other to raise huge capital and to grow their businesses.
The first time of offering the shares is normally referred to as IPO(initial public offer). These investors are willing to put capital, either large or small for a share in a growth business.
The advantage of raising money in this way is that you don't have to pay the money back or pay interest to the investors. Shareholders instead are entitled to share of the distributable profits of the company, known as dividends. Shareholders can also sell off their shares to acquire the capital gain that is their input capital or even more than that.
