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.