Do you want to know how to grow your money by investing in shares and becoming a shareholder?  Would you know whether to go for a small but futuristic company or a larger company and be sure of your ownership in the business?

There are three different ways through which you can be a shareholder in a company:

Articles of Incorporation
Most of the companies these days are incorporated due to the many benefits it offers like protection from liability, protection from bankruptcy and divisibility in personal and professional assets. The sure shot way to become a part of the company is articles of incorporation. When you sign the Articles, you enter into a contract with the company about your ownership in the company. It does not involve any major formalities and you are a co-owner in minutes.

Buying shares from shareholders
Another way of becoming a part of the company is to buy shares from some other shareholder. This method is also widely used but it does have its own complications. Just buying the shares is not enough. You need to provide the company written evidence about your contract and also the share certificate of the previous shareholder. The new shareholder can still be denied his or her ownership as there are certain restrictions in private companies in terms of transferring shares.
Buying shares from the company

In this case, the company agrees to provide you the ownership of the shares instead of transferring the ownership as in the case of buying from other shareholders. On incorporation, the Articles must put the maximum number of shares as the condition of the agreement. As a result, the company cannot issue more shares unless a new resolution is formed involving all the shareholders.

The shareholders have their ownership secured once all the legal formalities are done and the company adds the person in its shareholder’s register. Being a shareholder, you become a part of company’s success as well as failure but with limited liabilities.

Make sure you study all the pros and cons of buying shares of a particular company and fulfil all the legal proceedings to win the co-ownership.

Investing with shares has many advantages over many other forms of investment, this is because shares carry a high degree of liquidity that surpasses that of properties and also offers fast and ready access to your money whenever you need it. There are currently over 1200 companies listed on the stock market, with substantial stocks up for sale. These companies represent diverse sectors, providing you with sufficient match for your investment needs.

Investing with shares in a company gives you an opportunity to own part of it, which means you become a partial owner together with other shareholders. Many public listed companies issue shares to the investing public for various reasons, some of which are to raise funds for growth, expansion or a merger.

Almost 40 percent of Aussies hold shareholders certificates, most of these shareholders own stocks in companies such as Telstra and more. When you become a company’s shareholder, you’re granted the rights of say in how the company is run and can exercise this right in the company’s annual general meetings, you’re also entitle to a share in it’s profits.

You can purchase and alternatively sell shares in listed companies. Such companies are found on the Stock exchange. Share trading is done in the stock exchange via stock brokers. To trade your shares, you can either phone in your order to your stockbroker or trade with them via the internet. Floating is a term used when a company is listing for the first time. In such a case, you can submit your application to purchase shares by filling the share purchase form in the listing company’s brochures.  The new shares are sold to the public at a set price. Once the company lists, its shares can only be traded through a broker.

Shares come in various types, some of which are: ordinary shares, preference shares, partly paid shares and options. Investors with more experience can go for derivatives like options and warrants to further diversify their investment portfolio. Payments made to shareholders by companies from accrued profits are referred to as dividends. Dividends are paid biannually. Some companies prefer to plow back larger portions of their profits into creating more business than paying it out to investors as dividends.

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By purchasing a company shares, a shareholder automatically becomes a part-owner of the share issuing company. The share market is filled with tales of fortunes made and lost; this partly explains the reason why the stock market is so exciting and popular.  You profit from your shares by selling them at a price higher than the price you acquired them at; similarly, you suffer a loss by selling shares at a price lower than what you purchased them when the price falls, also called a bear market.

Whenever the company you invested in makes a profit, they share part of it with you as dividend. A shareholder is often an anonymous player in the share market and many make handsome profits. There is no holy grail to consistent profits in the share market, but prior to your odyssey into this exciting world, you should learn share trading basics.

Learning share trading basics will ensure that you’re conversant with the market lingo and other technical terminologies necessary to successful trading.  In order to trade shares, you have to approach a broker; this can be done electronically in an exchange floor. This means that you must familiarize yourself with the exchange floor environment; because it is here that your stockbroker organizes for your shares to be ordered. The exchange floor clerk locates your the trader from whom the shares can be purchased. Once they agree on price, a deal is settled.

Electronic transaction is the norm these days because of the efficiency and fast execution it affords. But even with electronic transactions you require a broker; the advantage is that order confirmations are instantaneous. In online trading, your broker will link you to the exchange network and search for buyers or sellers depending on your submitted order. Stock prices can not be foretold, they’re depended on various factors which cannot be easily predicted like geopolitical events and more.

Share prices fluctuate depending on demand at any given time. Any event that could negatively affect a company will also have a direct effect on the share prices of the said company. If you’re a novice in the stock market, learning share trading basics will undoubtedly equip you with sufficient knowledge to start trading.

Love life, not just the weekends. You only have one life, Live It! @ www.NicciAndLee.com