The capital of a company is divided into shares. Shares can be broadly divided into categories i.e. preference shares, equity.
They appeal to a range of investors because they offer attractive income opportunities and exposure to a wide range of sectors that provide growth and diversity within an investment portfolio.
Successful investors take care of their investments as though they are operating their business. It’s a major fact why it’s so crucial to construct your investment plan because it’s a plan that you’re investing in a business and it fixes your goals and objectives and how you’re going to function to accomplish them.
Research by the Australian Securities Exchange shows that share ownership is increasing across the board all age groups, income and education levels.
Capital Gains Over the Long-Term
Equities have provided some strongest after-tax investment returns over the long term. By owning equity in companies with growth potentials, investors have the opportunity to benefit from the capital gains as the asset grows in value over time.
A Good Source of Income
The dividend yield on equities is another important source of return. Unlike term deposits, dividends from equities can have in action built into earnings where companies are able to pass cost increases onto customers.
Equities are traded on major stock markets around the world. They are highly liquid that means they can be converted into cash quickly and with minimal impact to the price received. Unlike direct investments, there is relative ease in the transfer of ownership and the movement of equities.
After tax performance of equities is lifted by dividend imputation, it’s not shared by other asset classes.
The dividend imputation system allows investors who have been paid a dividend to take a personal tax credit since the company has already paid tax on the dividend.
Equities come with certain rights including the voting rights to which the investors are entitled. The level of corporate control depends on whether the equity is classed as ‘ordinary’ or ‘preferred’ and on the size of your shareholding.
Ordinary shares represent the majority of shares held by investors. When you own an ordinary share of a company, you usually have one vote per share that entitles you to participate in the election of the board of directors.
One of the unique features of owning equities is the notion of limited liability. This means that when you own equity in a company and in the event that a company loses a lawsuit and must pay a large settlement, creditors can’t come after your personal assets. Your liability is limited to the amount invested in the company.
While equity markets have historically produced higher returns than cash or fixed income over the longer term, the risk of capital loss exists especially over the shorter term.
As markets are not always efficient, using an active adviser like La Verne Capital may also help to manage risks and improve performance.
Your investment plan will act as a conduct and suggestion point for all your decisions during the investment process.
In this entire process of making and executing of an investment plan, La Verne Capital will provide you support to find out the answers of these questions.