For many of us, the securities market seems to be an inhumanly complex mechanism, which only Warren Buffett and the stock market tycoons from the movies can understand. In reality, everything is much simpler. Promotions are a convenient and effective tool for earning money, and absolutely everyone can learn how to use it.
This material is a kind of introductory lecture for those who want to engage in investing, but do not know exactly where to start. So, what are stocks?
A share is a security that gives its owner the right to participate in the management of the company and receive a part of its profit.
In a simplified form, everything looks like this: the company needs money for development, so it turns to investors for help, who gives the necessary amount. In return, they receive ownership of a certain share of the company, expressed in shares.
The total nominal value of the shares must be an amount equal to the authorized capital of the joint-stock company. Investors can be both individuals and legal entities, and their share in share capital is determined by the ratio of the number of securities owned by the company to the total volume of its shares. The company returns part of the annual profit to the shareholders as dividends — a kind of gratitude for financial support. Plus, it is advisable for you to immediately learn how to use the pip calculator. This tool displays the cost of one point in the currency of your account – for all major currency pairs. We recommend the forex pip calculator, as it is easy to use, and many novice investors will be able to figure it out quite quickly.
Types of shares
There are ordinary and preferred shares. The company can produce both of these types or limit itself to only ordinary ones. The volume of preferred securities should not exceed 25% of their total number. The difference between the two categories is the order of making a profit and the ability to influence the adoption of important decisions for the company.
Ordinary shares give the investor the right to participate in the general meeting of shareholders — the highest management body of a joint-stock company. The payment of dividends on such shares is not guaranteed and is carried out only after the distribution of premiums among the owners of preferred shares.
The owners of preferred shares do not participate in the management of the company (except for making decisions on the reorganization or liquidation of the enterprise), but the amount of their dividends is greater than that of the owners of ordinary securities. The ratio of premiums for ordinary and preferred shares is fixed in the charter of the joint-stock company. In addition, it is the preferred shares that have the primary right to receive payments at the end of the year.
Learn and try
Contrary to the claims of many companies, investing is not so easy. It is impossible to start trading on the stock exchange and earn millions without knowledge and skills. Like any other business, investing requires knowledge of theory and information, as well as practical experience.