Mainly since the advent of the covid19 pandemic, the buzz about invest in equity has been passed around quite frequently. However, while many people are there who vaguely understand the broader picture of the stock market as well as equity, the real meaning of equity shares is not really widely understood. Come on, if you don’t really know What is equity, you cannot make a good growth in this arena.
Equity share in brief
Equity shares are the type of shares that get issued to the public by the company for long-term financing. Such shares are not at all redeemable, and this is the main reason why they get considered to be a long-term financing option. Though beginning with equity shares, it is absolutely critical to familiarize yourself with a couple of terms like book value, even market price, face value, overall issue price, and numerous more.
Equity share features
There are numerous types of features to equity shares and a few of them are mentioned below:
Accumulate the wealth
After purchasing any equity share, given the specific company performs well, you can be in a position to achieve capital gains as well as dividends on the equity shares. Of course, this is something that differs from share to share.
Proper voting rights
When you are a shareholder of a company, you stay eligible to vote on the management of the company that is in somewhat proportion to the number of equity shares you have in the company.
Not sort of fixed dividend rate
The sum of dividend keeps variable each year based on the overall business outcomes of the company. This is the dividend rate that gets suggested and decided by the board of directors and even is declared by the shareholders.
Transferable by nature
You know what, the equity shares can get transferred from the primary shareholder to even another person with or even without consideration.
Perks of equity shares you should know
Well, once you dig into the realm of advantages of equity shares, you can be sure that you make the most of them:
- Once the company performs well, the dividend rate grows , thereby providing higher level of profits proving to be one of the main advantages to equity shares.
- The shareholders have a right to simply vote when it comes to deciding the management of the company.
- You can create wealth easily not just through appreciation of capital but even through high income through the dividends.
- – Equity shares can be easily and effortlessly sold by the shareholder that too without any hassle. In other words, if you hold one, you can vend it easily.
- Since the company’s worth in the market grows , the price of the invested capital even grows and hence giving greater returns.
- Then , investing in the right type of equity shares helps you diversify your portfolio and even mitigate financial dangers.
To sum up, since you know much about equity trading, you can do well for sure. After all, the platforms like 5paisa has much to offer you if you are a responsible investor!