Buying Stocks

Being financially wise is all about freedom. It means having more options to select and more time for onself and family. One of the means in creating wealth is through business. And one of the popular choices of investment is through buying stocks.

In simple terms, a stock is a share os an individual or group in the ownership of a company. It represents entitlement in its assests and earnings. The more stock you have, the greater your ownership stake is in the company. You can say, it is a stock, shares or equity. It is the same banana.

When you are buying stocks, you will own a part of the company’s assests and earnings, you are called a shareholder. Technically, you own every trademark, each contract of the company, and you also have the part of the responbsibilities and decision-making of the company through your voting rights. As proof to your ownership of a part of the company, you will be given a stock certificate. But in today’s computer age, often the brokerage keeps an electronic copy of this piece of document leaving no copy for the owner.

This electronic record is also known as holding shares in the street name. With the electronic copy of the stock certificate, it is made easier to trade. Back then, when a shareholder wants to sell his/her shares, he/she has to personally took the certificates down to the brokerage. Today, you can trade with just clicks away or through a phone call.

If you are a shareholder in a company, it does not mean you have a voice in the day-to-day runninf of rhe business. But instead, you can exercise your right through the annual meetings as part of the board of directors. The management has the responsibility and commitment to increase the value of the company for each and ecery shareholder. If the management perfoms otherwise, then the shareholders have the power to remove the current management. However, great influence meaning bigger shares such as in instituttional investors and billionaire businessmen have more control over the decision-making more than an individual ordinary investor.

For the ordianry shareholders, the management concerns are not such of a bog deal as long as they make profits out of their shares. Since many investors think that they don’t have to work for the money, the money works for them through their claim of profits in the form of dividends. The more you buy the stocks, the bigger portion of profit you may get. In case the compan goes down, then you each and every shareholder shall receive what is left after all the creditors have been paid.
Bear in mind that in buying stocks, the maximum value you can lose is the same value of what you have invested. Another feature of stock is the limited liability. This means that regardless of your ownership to the compnay, you are not personally entitled if the company has to pay its debts. If the company goes bankrupt, you can still have your personal assests.








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