You may have heard a lot about equity investments in the press recently and if you have you may have wondered whether they are right for you or not. An equity investment is the term applied to buying and holding stock shares on a stock market by either individuals or firms with the view to making a profit from capital gains and dividends as stock value rises.
In order to help you understand whether equity investments are something you could benefit from or not, we will now look at some of the main advantages of owning and holding these kinds of shares.
Compared to other types of investments, the potential profit you can earn from equity shares is much higher. Although the the dividend you could yield from these investments may be low, however there is a real potential to earn great profits from capital gains. This means that the full yield in general could be very substantial over time.
Liability Is Limited
When it comes to corporate organisations, the owners’ liability is limited and the share is fully paid. Shareholders however in the past, would often lose out on their investment. With equity investments though, they are in no way liable for the failures of the company to meet their obligations.
There are many tax advantages you are privy to as a result of owning equity shares. Particularly when your shares yield a large amount as a result in the increase of capital gains or principals, the rate at which you are taxed is lower than other forms of incomes are taxed.
Easy And Free To Transfer
One of the unique advantages of owning equity investments is also that you can transfer the interest over to someone else with no hassle. In this situation it is of course, important that the company transfers ownership of the books so that voting rights, dividends and other privileges are passed to the new shares owner.
However, it should be noted that as there are very few buyers who are interested in this kind of shares, that having the right to sell you shares does not mean you will be able to.
Protects Against Inflation
Equity investments can be used as a protection against inflation, though it should be noted that it does not compensate for the decreasing purchasing power in its entirety because of the money-rate risks. Be aware though that when interest rates are much higher, investments are often less attractive.
Shares In The Growth
One of the most important and attractive advantages of equity investments though is that they increase in value as a result of the company’s profits increasing over a long period of time.
Hopefully the above has shown you many of the attractive advantages of equity investments. However, it is always a good idea before spending any money on investments of any sort that you speak to an expert to get a better understanding if it is worth the risk or not.