Benefits of Investing on the Stock Exchange
By investing on the stock market you stand a chance to benefit from:
- Earning Dividends – Dividends are a distribution of part of the company’s net profits to shareholders.
- Making Capital Gains – This is the increase in the share price over time.
- Getting New Issues of Shares - You can get the benefit of Bonus Issues and Rights Issues. A bonus issue is a free issue of shares to existing shareholders based on a ratio of the number of new shares to the number of current shares held. Rights Issue is an issue of new shares based on a ratio of the number of new shares to the number of shares currently held, and to which existing shareholders have a priority to subscribe at a fixed price.
- Security and Collateral – Your shares can be pledged as security when borrowing money from financial institutions such as banks.
- Liquidity – You can sell your shares on the Stock Exchange at anytime to obtain cash.
- Diversifying your risk – You have a wide choice of companies to invest in.