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3) Risk

Whoever is in possession of a degree of equity, an action not really know what benefits you get from owning it. There are lending money in exchange for it back, but when buying becomes a part owner of the company, thus risking your investment.

The equity market, as its name suggests, is volatile. By buying shares is assuming the risk of losing some of the investment. This is because it is our money is now part of a company, but we are not investors in some form of that company. We are one of the “many masters” to hold shares.

As I replied to a reader in the previous post regarding the risk and speculation. A fool and speculator, I would read the name of a new company and if this appeals to you (say Super High Tech) put your money there. Read the rest of this entry »

In the stock market buy / sell shares in companies and other financial assets are traded (obligations, rights issue and debt). Companies decide to sell (issue) one or another product based on their needs and commitments that are willing to take the time to find a way of funding money savers.

1) Fixed and Variable Income

Businesses, banks and the state issued the asset being traded on the stock market. As fixed and variable remuneration to investors through dividends or interest newspapers can be classified into two major asset categories or groups, called fixed-income securities or equities. Among the first (fixed income) are the obligations and debt.

Shares belong to the second group (equities) and are the preferred mode by companies when seeking funding. There is also a hybrid product that they are “convertible bonds.” First offer a stable interest and then transformed into equities.

2) Safety

When an investor buys a fixed income security knows exactly what is going to get returns over a period of time fixed in advance. It is safe.

How goes public? The issuer company or divide the amount of money needed in a number of titles and try to sell them. In exchange for the amount you paid, you must give the investor a fixed rate to be paid at specified intervals.

Credit to: Mariano Cabrera Lanfranconi