Posted By Jeffrey A. Bryant Posted On

Advantages of Investing in Stocks

Investments with minimal risk usually offer relatively small returns, on the other hand, investments that are high risk but generate large returns. Those of you who are already interested in investing in stock instruments must study the benefits and risks. In this website, we will discuss three advantages of investing in stocks, namely getting capital gains, earning dividends, and getting bonus shares.

Capital Gain
Investors will target to sell higher than the purchase price. This difference occurs because of the fluctuation between the supply and demand of these shares. Change can be triggered by many things, including the company’s performance from time to time. Investors who are oriented towards short-term investments usually take advantage of capital gains using chart analysis techniques by studying historical patterns, usually known as technical analysis. Meanwhile, investors with a longer orientation can select which issuers have the potential for attractive capital gains, using fundamental analysis.

In addition to capital gains, investors can also pocket dividends, namely company profits that are distributed to shareholders. Dividends can also be distributed in the form of additional shares to investors. Both are carried out when the majority of shareholders agree to distribute dividends. Not all companies have profits, agreed to distribute dividends to their shareholders.

Bonus Shares
Bonus shares are also one of the things you can get by investing in stocks. Not all companies provide bonus shares, these are shares that are distributed by the company to shareholders taken from the share premium. Share premium is the difference between the selling price and the normal price of the shares when the company makes a public offering on the primary market. This bonus stock can be a special attraction for stock buyers.

There is also a risk of investing in Shares that must be understood

Capital Loss
Investors sell shares for less than their purchase price

Liquidation Risk
The company is declared bankrupt by the Court or dissolved.

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