Shares can be defined as a sign of ownership of a person or party ( entity) within a corporation or limited liability company . By including the capital , then that party has a claim on corporate earnings , a claim on corporate assets , and the right to attend the General Meeting of Shareholders ( AGM ) . Issuing stock is one of the options when the company decided to finance the company . On the other hand , the stock is an investment instrument that has been chosen because stock investors are able to provide an attractive level of profit .
Advantages of Investing in Stocks :
Advantages of investing in stocks :
Dividend is the advantage given by the company and came from the company’s income . Dividend given after approval of the shareholders in the AGM . Dividends distributed by the company can be either a cash dividend or a stock dividend may also be
- Capital Gains
Capital Gain is the difference between the purchase price and the selling price . Capital gains are formed in the presence of trading activity in the secondary market . For example, investors buy shares of XYZ at a price of Rp 2,000 per share and then selling it at a price of Rp 2,500 per share, which means the investor get a capital gain of U.S. $ 500 for each share it sells .
Risk of Investing in Stocks
In addition to having the advantage , investing in the stock also has a risk :
- Capital Loss
Is a condition in which investors sell stocks is lower than the purchase price . For example, shares of PT . ABC were purchased at a price of Rp 2,000 , – per share , then the stock price continued to decline until it reaches Rp 1,600 , – per share . For fear that the stock price will continue to fall , investors sold at Rp 1,600 , – so that a loss of Rp 400 , – per share
- Liquidity Risk
Owned company , was declared bankrupt by the Court , or the company is dissolved . In this case , the claim of shareholders last priority after all liabilities of the company can be paid ( from the sale of company’s assets) . If there are leftover from the sale of the company’s property , then the rest is divided proportionately to all shareholders . But if there are residual assets of companies , the shareholders will not gain from the liquidation . This condition is the worst of shareholders . For that a shareholder is required to continuously follow the development of the company