The Advantages Of Investing In Stocks
While the stock market is a great place to look if you are trying to make money investing; there are other advantages to investing in stock as well. Shareholders are entitled to many benefits that they may not be aware of. This article will help to familiarize you with a few of the benefits of investing in the stock market.
The following is an excerpt from my book, Your Financial Book: A Guide To Navigating The World Of Personal Finance.
What is a stock exactly?
A simple definition of stock would be ownership in a company. Each share of stock that you own represents a fractional share of ownership in the company. As a shareholder of a company, you possess a number of rights:
(1) the right to vote on major corporate issues.
(2) the right to share in the profits paid out by the company.
(3) the right to attend shareholder meetings.
Shareholders should take an active role in participating in proxy voting, reading all company financial reports and listening to quarterly conference calls. They have the right to vote on topics such as management, changes in company policy and executive compensation. Shareholders are also entitled to any dividends that have been paid out by the company based on their percentage of stock ownership. Shareholders also get to attend shareholder meetings that typically take place annually at the corporate headquarters.
Stocks offer the opportunity for much greater returns than other asset classes. The stock market has historically returned an average annual rate greater then 10%. This return is greater than real estate, treasury bonds, gold, certificates of deposit and savings accounts. There is an excellent article, by Dr. Jeremy Siegel called “Stocks the Asset of Choice for the Long Run”, which explains that for long term investing no other asset class has delivered the return of the stock market.
©2011 Buy Like Buffett. All Rights Reserved.
.
