8 Valuable Features of Equity Shares

 

Equity Shares are pieces of ownership that are made available for public purchase through IPOs (Initial Public Offerings). Here, each member is a shareholder that owns a fraction of a company. As a shareholder, you have several rights including the right to vote.

 

 

Features of Equity Shares

Listed below are the features of equity shares that one needs to know:

Permanent Shares

The capital from equity shares stays permanent with the business as they are considered to be permanent assets of a company. Moreover, you also serve as a permanent source of capital for the company.

Notable Returns

Equity shares are capable and have the potential to bring about notable returns to the company’s shareholders. You should keep in mind that equity can be a risky investment option because the shares are highly unpredictable. The movement of the price can be substantial since it can be dependent on internal and external factors.

So, investors who have a high-risk tolerance should only invest in equity shares.

Dividends

All the shareholders share the profits that the company gains. Apart from this, the company may give out dividends to its shareholders from its yearly gains. However, the company is not obligated to distribute dividends, especially if they don’t receive good profits and don’t have excess cash.

On the other hand, in case of high profits, shareholders will receive good returns.

Voting Rights

Most shareholders will get voting rights, which lets them choose the people who will run and govern the business. When investors choose effective managers, it will benefit the company by boosting the annual turnover, which in turn gives investors better returns.

Additional Profits

As a shareholder, you are eligible for additional profits that a company makes, making your wealth increase.

Liquidity

Equity shares are highly liquid investments. Since they are traded on the stock exchanges, it enables the interested investors to buy and sell shares anytime during trading hours.

Fewer Liabilities

The losses that the company goes through do not affect the shareholders directly. They are only affected by the decrease in the price of stocks as it will have an impact on their ROIs. Their liability is restricted to their investments alone.

Easily transferable

Last but certainly not the least of the features, equity shares are easily transferable. It is not only easy to transfer the ownership to another person, a shareholder has the right to freely transfer their share to anyone as well.

Conclusion

Equity shares are not only famous methods of investment but also highly lucrative. You need to have a competitive mindset and plan for the long term. While investing and trading has become easy, especially with the introduction of the internet, you may still require help. You can seek guidance from India’s best equity broker, Goodwill. They make trading easy and provide useful market insights.