Almost everyone worldwide has an interest in shares, whether they realize it or not. Millions of people around the world own shares directly. However, many millions more have an indirect stake in the stock market through pension schemes, life insurance policies, unit trusts and tax-free saving accounts. All of these, invest in shares traded on the stock market.
Today, increasing number of people own shares around the world, There is more risk ‐ but there is the opportunity for better reward over the longer term. With deposit accounts, you earn interest on your capital.
When you take your cash back, you get back exactly the same amount that you first deposited (plus the interest it has earned).
Historically, money invested in shares over the long term (ten or more years) has almost always outperformed regular saving accounts.
Before investing in stocks and shares, you should understand your own financial position and what you hope to achieve with your investments. Your regular financial obligations should be protected and preparation should be made for unexpected expenses.
Investment should be made out of the excess money saved and as a substitute to keeping the money vacant in a bank account.
Having done this, you are ready to consider investing the surplus in stocks and shares. The three main rationales for owning shares are summarized below:
Ownership in a Company
When an individual invests in the stock market, he automatically becomes a shareholder of that company. As a stockholder, he is entitled to the following benefits:
- Voting rights
- Dividends to be declared by the corporation and
- Share of the remaining assets of the company if it is to be liquidated.
Investors in the stock market make money through dividends and capital appreciation. When a listed company declares dividends, it increases the shareholders’ investing power. An investor who buys into the company at a low market price and sells it at a higher price will gain capital appreciation.
Open your Mercato investing and trading account in 3 easy steps
Create an account
Complete your application by following the “CREATE AN ACCOUNT” link below.
* The Investec Corporate Cash Manager (CCM) is an exclusive call account from Investec Private Bank. The account is opened in the client’s own name and funds can be moved at the client’s discretion to his/her investing or trading account. Mercato Financial Services, a division of Lentus Asset Management (Pty) Ltd, as the intermediary, administers the funds on behalf of their clients through an administrative system situated at their offices in Rosebank, Johannesburg.