What Is Share With Questions. Companies usually issue shares in the form of shares in order to acquire equity, e.g. for new investments. The money is given to the stock corporation for an indefinite period of time, i.e. not paid back. With their shares, investors participate in the company’s economic development: This means that everyone bears losses up to the amount of their investment. If the company goes bankrupt, the shares can become worthless. If a company makes a profit, the general meeting can decide to distribute part of the profit to investors as dividends.
If you have made a profit from the selling of your shares or earned dividends from public corporations, they are taxable. There are costs involved with the purchase, holding and disposal of shares.
Possible goals: When could investing in stocks make sense for me?
If an investor wants to participate directly in the means of production with his money, he buys into a company. So he acquires an entrepreneurial stake. For small investors, it is a good idea to participate in a company’s economic development by buying shares. However, they are also exposed to the risks of business development.
Risks: What are the dangers of investing in stocks?
The value of stocks fluctuates. Stock prices do not necessarily move in line with a company’s current earnings. The economic development of the company expected by market participants can also be reflected in them, both positively and negatively. The prices of shares also depend on other influences that have little to do with the company itself. For example, the overall economic situation or the political situation in a country can have an impact on the course. In the event of poor corporate or macroeconomic development, the share price can fall. If the company goes bankrupt, the stock can ultimately become worthless. The money invested would then be lost. Therefore it makes sense to
Retail investors shouldn’t just check the prices of the past few months before buying a particular stock. Until investing, do as much homework as possible about the venture. And decide rationally, not on the basis of supposedly hot tips, where to spend your money and how much.
Use: What can I get from investing in stocks?
When you buy a stock, you are entering into an entrepreneurial stake. If the company makes a profit, you as a shareholder can participate in part of the profit through a dividend payment. If the market also assesses the company’s future prospects positively, the demand for the shares and thus their price may increase. This benefits you at the moment when you can sell your paper again at a better price than you paid yourself at the time.
Own duties: What are my obligations and costs when buying a share?
In order to buy, hold and sell a share, you need a so-called deposit account. A custody account also causes running costs.
You can save money here if you find out about the fees and costs of banks in advance. These fees and costs are listed in the so-called list of prices and services. This also contains information on the so-called transaction costs, i.e. the costs and fees that are generally incurred when buying or selling a share. You should therefore check the price and service specifications carefully and, if necessary, compare different offers.
If you have decided to buy or sell a share, your bank / advisor is obliged to provide you with all costs in connection with the purchase or sale of your share in good time in advance by means of so-called ex-ante cost information – independently whether you buy or sell the stock without advice or with advice.
NOTE: As a purchaser, you are liable for working out if the price of the share is warranted. This could be challenging for institutional investors. Therefore, you can first get acquainted with the respective business and this sort of investing before you plan to invest in stocks.