Monday, 25 april 2022Many people are not familiar with stock investing. Even though in the era of information disclosure like today, learning stocks from scratch can be done with internet capital even for beginners. Studying buying and selling stocks correctly can provide maximum benefits for investors or save stocks.
Until now, stock investment is one of the fastest ways to increase wealth. This investment instrument is classified as safe as long as we already know how to trade daily stocks along with the risks that will be faced. But before starting investing or saving stocks, it's a good idea to study stocks first, either online or through books.
Stocks at a glance
Shares are a sign of equity participation in a company or limited liability company. People who invest in a company are called shareholders and have claims on the company's income, company assets, and are entitled to attend the General Meeting of Shareholders.
From the definition above, shares are evidence of a person's ownership of a company/business entity. If you own stock, you become part of the owner of the company. That's why shares are classified as securities because they are legal evidence of a person's ownership of a company. The larger the shares owned, the greater the power of a person in the company.
By issuing shares, the company will get long-term funding and is one way to increase business capital apart from issuing bonds. From the investor's perspective, stocks are the most preferred investment instrument because they provide an attractive rate of return.
In playing stocks, we also have to know several types of capital markets, here are some examples of capital markets.
1. Common Stock (Common Stock)
Shares are a sign of ownership or participation of a person or entity in a company. Blue chips are a type of common stock issued by large companies that consistently demonstrate the ability to earn profits and pay dividends.
2. Proof of Right (Right Issue)
Proof of Right is defined as the right to pre-emptive securities at a predetermined price for a certain period. Proof of Rights is issued in a limited public offering (rights issue) in which new shares are offered for the first time to existing shareholders.
Proof of Rights can be traded in the Secondary Market for a certain period. Investors have the privilege of buying new shares at a predetermined price by exchanging their Proof of Rights. So investors can benefit by buying new shares at a lower price.
3. Bonds
Another product traded in the capital market is bonds. A bond is a debt acknowledgment letter from a company with the ability to buy the principal debt and repay it periodically or at a predetermined time.
Interest is the source of the bonds' profits and can be paid annually, semiannually or quarterly. Bonds involve a binding agreement between the lender (the issuer of the bond) and a second party as the beneficiary of the loan.
The issuer will get a loan from the bond holder with various set rules such as maturity of repayment, interest paid and the amount of principal debt.
4. Preferred Stock or Preferred Stock
Preferred shares are shares that give special rights or priority rights of choice to the holder. The privileges are in the form of the right to exchange shares with ordinary shares, the right to influence management in the nomination of the board, the right to obtain a fixed amount and a lower risk when compared to ordinary shares, and the right to be prioritized when receiving dividends.
5. Warrants
Warrant is the right to buy a common stock at a predetermined time and price. Warrants are usually sold together with other securities, such as bonds and stocks. The purpose of issuing warrants is to attract investors to buy shares or bonds issued by the issuer.
6. Mutual Funds
Mutual funds are another investment option to raise funds from people who have capital. Furthermore, the investment manager will invest the funds in the form of a collection of securities (securities portfolio).
The sources of mutual fund profits come from three sources, namely dividends, increase in net asset value and capital gains. Net asset value is a comparison of the total value of the investment made by the investment manager and the total volume of mutual funds issued.
Those are some understandings of the capital market that we can learn before playing stocks.
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Learning to invest in stocks should not be arbitrary and must really study every detail, this article will help readers to learn about stock investing