Shares are the capital of a company that are offered by the organisation for sale purpose. By selling the shares, capital is raised. There are two types of shares: equity shares and preference shares. Those who buy shares are known as shareholders. 

When someone purchases equity shares, they get the right to share the earnings of the company. However, they also share the loss. Moreover, they also get the voting right. When any important decision is made related to the company, they can also participate in it by casting their vote. 

Those who purchase preference shares get a fixed dividend. In addition to this, they do not have voting rights.  

Features of share

Ownership: When someone purchases shares of a company, they get a share in the company’s earnings and voting rights. 

Dividends: Shareholders always get a dividend after purchasing the shares. Dividend is basically a share in the company’s profit. 

Voting right: Those who purchase shares also get the right to vote in the company’s decision. Whenever company related important decisions are made, shareholders take part in it. 

Risk and return: Purchasing shares is also risky as sometimes, the value of the share falls down so the loss needs to be borne by the shareholder. However, it is rewarding also as when the value of the share rises, the shareholders get more profit. 

Limited liability: No shareholder is obliged to bear the whole loss suffered by the company. They will bear only that much that is equivalent to their share’s value. 

Participation in meetings: Shareholders are allowed to participate in the company’s meetings and put forth their ideologies. 

Why invest in shares?

Investing in shares is a lucrative approach as it results in increasing the value of the investment. In fact, by investing in shares, a person gets a fixed dividend which results in regular flow of income. Moreover, investors can easily buy or sell their shares whenever they want. 

Who should invest in shares?

People who are ready to take risks should invest in shares, as investing in shares is risky. No one can predict exactly when suddenly the value of the share may fall down or rise. Moreover, those who are ready to invest their money for a long time should go for this. 

Therefore to invest in shares, proper knowledge is must which we at The Profits Manager give through our courses. 

What is a stock?

When all the shares of a company are combined together, they are known as stock. Stock includes all shares equity, preference and convertible shares. 

Types of shares

Authorised share capital: It is the total value of the shares of a company for which a permit is granted to the company to sell it. 

Issued share capital: The shares actually issued by the company are known as issued share capital. For instance, if the authorised share capital is 5,00,000 but the company issued only 3,00,000 shares, then that 3,00,000 will be termed as issued share capital. 

Sweat equity shares: These shares are not for people to purchase. Instead, these are given to the personnel of the organisation to appreciate their work as a reward. 

Right shares: These shares are offered for sale purpose to the existing shareholders after that are sold to the general public.  

Bonus shares: Existing shareholders get these shares but without paying anything for them. 

Redeemable and irredeemable preference shares: Redeemable shares are the one which have a fixed maturity date when the company purchases those sold shares again. However, under irredeemable, there is no maturity date. 

Convertible and non-convertible preference shares: Under convertible category, the shareholder has the right to get its shares changed into equity ones, whereas in the case of non-convertible, no such right is there. 

Participating and non-participating shares: Under participating shares, if the value of the shares rises then the shareholders will also get extra profit, but in non-participating, there is a fixed dividend given irrespective of company’s profit. 

Cumulative and non-cumulative: Under cumulative, if the company suffers a loss and is not able to pay the dividend, then that amount will be paid in the coming years. In the case of non-cumulative, this advantage is not there. 

If you also want to become an expert in the stock market, want to know about shares and want to do trading easily, then do not worry we at The Profits Manager, render various courses related to stock market to make you well-acquainted with all aspects of trading.