Get to know the news on how stocks provide benefits. The simple analogy is that shareholders are company owners. So if the company is profitable certainly profits will fall to the owner. The net profit that the company can obtain when it performs well will be set aside to shareholders.
How is the division?
1. Capital gain
The benefits are derived from the growth in the value of assets and capital. Confused? Look, just think of the shares as certificates of land and the land is a company. Then the land price rises and you sell it. The difference between the land purchase price and the selling price is called a capital gain.
Dividends are profits derived from company performance. Back to the land analogy. For example, if the land is used as a parking location, the income from the parking rent will go to the landowner. Usually, shareholders prefer to look for capital gains because they are faster. Different from dividends whose value is smaller because it depends on the company’s performance.
There are several factors that affect stock prices and you who are just starting to invest in stocks should know what these factors are. Because the shares are different from other investment instruments. It is possible that the return given is high, but the price per share is fairly volatile. Due to price fluctuations, it doesn’t close the possibility that you could experience losses due to falling stock prices. That is why novice investors are strongly advised to fully understand what are the factors that influence stock prices.
Stock fundamentals reflect the company’s performance, is the company performing well for one quarter or is it performing poorly? This fundamental condition is one of the factors that influence stock prices. Investors can find out the fundamental conditions by checking financial statements that can be accessed openly. You need to know, this financial report is very long and many pages. For a quick check, you can see the latest quarterly earnings and profits. Then, you have to compare it with the previous quarter’s earnings and earnings.