A share is simply a
part-ownership of a company. If, for
example, a company has issued a million
shares, and you own 10,000 shares in it,
then you own 1% of the company. As a
part-owner of a company, you are
investing in the management of the
company. You should invest in companies
you feel confident are well run.
At its most basic, the stock exchange is
a market which brings together people
who want to buy shares in a company, and
those who want to sell their shares. The
laws of supply and demand determine the
prices buyers and sellers settle on. The
companies whose shares can be bought and
sold on the stock exchange are referred
to as listed companies.
What are
the reasons for investing in shares?
Capital Growth: Over the long term,
shares can produce significant capital
gains through increases in share prices.
Some
companies can also issue bonus shares to
their shareholders by way of a bonus
issue as another way of passing on
company profits or increases in their
net worth. A bonus issue occurs when
money from a company's reserves is
converted into issued capital, which is
then distributed to shareholders in
place of a cash dividend. A bonus issue
does not change the value of your
investment.
Many listed companies
also make what are called rights issue,
where they provide opportunities to
their existing shareholders to buy more
shares in the company at a discounted
rate and without the need to buy through
investment firms, thereby saving on
fees. Companies do this as a way of
raising more capital for expansion, and
it provides you with an opportunity to
increase your holding in the company at
a discounted price if you are confident
of its potential.
Dividends:
Companies may pay a portion of their
profits to their shareholders in the
form of dividends. The amount of
dividends to be paid to existing
shareholders is usually determined and
approved at the company's Annual General
Meeting. The amount of profit which is
not distributed is ploughed back into
the company in the form of reserves.
Such accumulation of reserves is then
used by the company for future projects.
Buying and Selling: Compared to
other investments (such as property),
shares can be bought or sold quickly
through an investment firm. You can, if
you so wish, sell part of your holdings
in any shares.
Diversifying: As
part of your investment strategy, you
may have part of your money invested in
shares. You may buy shares directly on
the stock market or units in collective
investment schemes which invest in
shares.
Pramana Capital
Pty Ltd act as a
liaison between our clients and the
stock exchange. Our primary function is
to buy and sell financial products,
including stocks, on behalf of our
clients. Brokers pool resources to help
our clients negotiate how things work in
the stock market.
Important
functions we perform:
We facilitate transactions in the
stock market by connecting buyers and
sellers of financial securities.
We
take care of the paperwork that goes
into making the trades for a client
legally sound.
We help our
clients to buy and sell financial
securities on the stock exchange.
We
offer access to a wide range of asset
classes.
We offer a suite of
research and advisory services.