While the stock market is a great place to look if you are trying to make money investing; there are other advantages to investing in stock as well. Shareholders are entitled to many benefits that they may not be aware of. This article will help to familiarize you with a few of the benefits of investing in the stock market.
The following is an excerpt from my book, Your Financial Book: A Guide To Navigating The World Of Personal Finance.
What is a stock exactly?
A simple definition of stock would be ownership in a company. Each share of stock that you own represents a fractional share of ownership in the company. As a shareholder of a company, you possess a number of rights:
(1) the right to vote on major corporate issues.
(2) the right to share in the profits paid out by the company.
(3) the right to attend shareholder meetings.
Shareholders should take an active role in participating in proxy voting, reading all company financial reports and listening to quarterly conference calls. They have the right to vote on topics such as management, changes in company policy and executive compensation. Shareholders are also entitled to any dividends that have been paid out by the company based on their percentage of stock ownership. Shareholders also get to attend shareholder meetings that typically take place annually at the corporate headquarters.
Stocks offer the opportunity for much greater returns than other asset classes. The stock market has historically returned an average annual rate greater then 10%. This return is greater than real estate, treasury bonds, gold, certificates of deposit and savings accounts. There is an excellent article, by Dr. Jeremy Siegel called “Stocks the Asset of Choice for the Long Run”, which explains that for long term investing no other asset class has delivered the return of the stock market.
I totally agree although I principally invest in equity mutual funds.
This is all very true. When I own a stock, I definitely participate in the company as much as I can, and I LOVE reviewing the quarterly statements! To me, it’s a load of fun!
You are more dedicated than I. I am not a quarterly reports fan!
Some will even give you discounts on their products, or special once a year deals.
Glad you pointed out that article by Dr. Siegel. He is a smart man. Love the fact that he easily explains how stocks have been a better investment than Gov’t bonds over the course of the last 20 years or so. Really interesting stuff.
Very true but you just have to be careful to not believe everything you read about a stock you may be interested in. Two things to remember are the competition of a stock could put out a lot of bad articles about it and in return someone with a vested interest in a particular stock could put out a lot of good content about a stock.