The entry into stock trading is considered a promising way to build assets and to benefit from the developments on the financial markets. In order to be able to take this path successfully, however, it is indispensable to deal intensively with the essential foundations of the stock transaction in advance. A well-founded understanding of the functioning ofStocks and stock exchange is the indispensable basis for sustainable success. Anyone who moves to the terrain of the stock market without extensive knowledge risks losses and will hardly be able to use the numerous opportunities that arise effectively.
What are stocks? – Being, function and rights
Stocks are special securities that make the owner, the so-called shareholder, a co-owner of a company. By purchasing a share, the shareholder acquires a clearly defined share in the respective stock company. This ownership share is legally certified and forms the basis for a variety of rights and obligations that are associated with the ownership of a share.go along. In contrast to other forms of investment, such as bonds, the shareholder does not become a creditor but a real partner in the company. The term “share certificate” makes it clear that the share in writing confirms the shareholder in writing that he is a co-owner of the company. There are various advantages from this: Once the company makes profits,the shareholder participates in the form of the so-called dividend. This annual or semi-annual profit distribution is proportional to the number of shares held. In addition, shareholders have the option of realizing a price gain by selling their shares if the selling price exceeds the original purchase price. In this way, shareholders cancurrent income and benefit from increases in value.
The role of the stock corporation and the stock exchange
Large, listed companies are mostly organized as joint stock companies (AG). This legal form gives you the opportunity to raise equity on the capital market by issuing shares and trading on the stock exchange. The IPO of a company, also known as the Initial Public Offering (IPO), marks the moment when the company shares publiclybe offered. From this point on, every investor can acquire shares in the company with a securities account and thus participate in the economic success. In contrast to the classic borrowing, where companies borrow money and have to repay them together, the capital raised via shares represents so-called equity. shareholdersIn return, they receive voting rights, can attend general meetings and have an influence on important corporate decisions. While a lender is only entitled to repayment and interest, the shareholder is directly involved in the entrepreneurial risk and in the success.
Influence and shareholders’ rights of participation
The more stocks an investor holds, the greater their share of the company and the stronger their influence. In practice, this means: Anyone who owns a significant amount of company shares, ideally the majority of the shares issued (over 50 percent), can have a decisive say in votes at the general meeting. In theory, it would be possible for an investor to go throughto control the acquisition of a majority stake or to block far-reaching decisions. In reality, however, this influence is limited to institutional investors, large investors or other companies. Such a majority stake is only available in exceptional cases for private investors.
Stocks as sustainable and profitable investment
For the vast majority of investors, however, when buying shares, the focus is not on control of a company, but rather the prospect of a sustainable, long-term and high-yield investment. Stocks offer the opportunity to participate in the growth and success of strong companies while also benefiting from the development of the economy. through theResale of shares at higher prices and regular dividend payments open up attractive earnings opportunities, which are often not to this extent in other forms of investment.
Who enters the stock trading
In summary, it can be stated: Anyone who gets involved in stock trading must familiarize themselves with the central principles and continuously expand their own knowledge. Only those who understand the complex connections can make informed decisions and benefit from the diverse possibilities of the stock market in the long term. Understanding the legal, economic andFinancial aspects is the key to a successful investment strategy and forms the basis for a responsible and profitable handling of stocks.
