What does investing in stocks mean?
We are still reviewing the important rules that make an investor successful.
One of the key thing is to perfectly understand what you are doing.
When you invest in stocks, you are buying shares of a company. What does this mean? Each of these shares represents a share of the capital of the company. The share that a partner holds in the company is proportional to the number of shares of that company that he owns.
Once you have bought a share, you officially become a shareholder. In other words, you have become a part-owner of the business.. no more no less. This is something that relatively few investors fully understand.
There are three main reasons for investing in stocks.
· The first reason is obviously to make money. Stocks can help shareholders gain money following their investment in two ways: dividends and capital gains. In a market like Vietnam, it is not unusual to see companies paying 5-7% per year in dividends to its shareholder.
· The second reason is that investing in stocks means investing in the real economy. You are helping the economy and you are indirectly helping companies to give jobs to people. Your investment brings money to the company and it can help it to develop internationally, improve its technology and so many other things often overlooked but highly important.
· Financial flexibility is the third reason we see. Investing in real estate is not a liquid investment but investing in stocks is. This gives you the flexibility to get your money back at any point in time. This is an advantage that should not be neglected.