Advantages and Risks of Playing Stocks
Do you want to get into Stock trading the right way? Check out the following advantages and risks of playing stocks that novice traders must know.
Advantages and Risks of Playing Stocks
Lately, stock investment is becoming popular and a trend for the community, because this has been going on for a long time.
Stock itself is a very valuable black ink on paper created or made by a limited liability company.
Where for those who own or buy shares, then you already have partial ownership of the company. To need to understand how to play stocks correctly and safely.
For shareholders, there are advantages and benefits to share ownership of the company in which they apply. However, the shareholders also have such risks regarding this stock investment.
So what are the benefits and risks for shareholders?
In this article, We will review the advantages and risks of investing in stocks. Let’s see!
Advantages and Benefits of Playing Stocks
The main benefit of stocks is as an investment instrument that can be short-term or long-term.
Well, usually investors who take advantage of their shares in short-term investments are expecting to get a captial gain from the difference between the selling price and the purchase price.
Of course, this is very different from using their shares in long-term investments. Because these investors will buy more often or save their money to buy other stocks.
Based on the two things above, there are several advantages that can be obtained and taken by investors who invest in shares, including:
1. Dividend
Dividend is a value of profit received from the distribution of cash profits from a party making a public offering or also called issuer.
This dividend can be earned for investors and to get additional income when the issuer owned has good performance.
2. Capital Gain
The definition of capital gain is the profit obtained from the difference in the selling price of the stock which is higher than the price at which it was purchased. Where these investors will get a profit from the amount of value that has been deposited.
3. Can be run flexibly
Now, the next convenience is that you can operate online, from buying to selling so that it no longer interferes with your main work.
Risks Obtained from Stock Investment
Along with providing great benefits and advantages, this stock investment still carries a considerable risk.
Here are some risks that you must face when investing in stocks:
1. Investors can lose their entire capital
The first risk is that you as an investor may lose all of your capital. This happens when the purchase price of a stock is greater than the selling price. The result is that the shareholders or investors will lose all their capital.
2. Liquidation Risk
This liquidation risk occurs when the issuer goes bankrupt and the shareholders have the final claim on ownership of a company after the obligations of the issuer have been paid.
In fact, the most terrible risk of share owners is not getting a penny for ownership of assets, assets at the time after the issuer has paid its obligations.
3. No Dividend Distribution
The third risk is the absence of profit sharing or dividends. This occurs when the issuer prefers to use the profits to increase operating capital and expand business.
As a result, the issuer will not distribute its profits in the form of dividends to shareholders.
4. Delisting Shares from the Exchange
There are several reasons that can make a stock erased from the stock exchange records, until the stock can no longer be traded. Of course, this makes issuers and shareholders suffer huge losses.
Well, that was an explanation of what risks you can experience when playing stocks. It would be nice, before plunging into the world of trading, first study the type of stock trading or what type of stock it is, so that you don’t suffer a big loss.
