Shares (Stocks)
A share is a type of security issued by a joint-stock company, recorded in book-entry or electronic form, confirming the holder’s ownership of one or more shares of that company.
By owning shares, an investor becomes a shareholder, thereby a co-owner of the issuing company, entitled to corresponding rights and obligations.
Generally, there are two types of shares issuing by a company: common shares and preferred shares, each offering different rights and benefits.
- Common shares represent basic ownership in the company. Holders of common shares are entitled to standard shareholder rights, including the right of freely transfering shares, the right to vote on key corporate decisions at the General Meetings ofShareholders, and to receive dividends based on the company’s performance and the market value of their holdings.
- Preferred shares grant certain special privileges depending on the type of preference attached. Holders of preferred shares may enjoy more stable dividends such as priority in dividend payments, or preferential rights in asset distribution in the event of liquidation or bankruptcy. However, they are usually not entitled to vote or run for election at the General Meeting of Shareholders.
1) Long-term Growth Potential
- The value of stocks tends to appreciate over time, allowing investors to build wealth through capital gains.
- Investors may also receive regular dividend income when the issuing company performs well, creating an additional source of returns.
2) Flexibility and Liquidity
- Low entry capital: Investors can start with a relatively small amount of money and gradually expand their portfolio.
- High liquidity: Stocks are easily traded on the market, allowing investors to buy, sell, or rebalance their portfolios at any time.
- Additionally, investors can use margin lending services as a form of financial leverage to potentially enhance their returns.
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