What are business shares?
When buying a business share, you’re buying yourself part ownership of that particular company. Businesses may choose to offer this because they need investment into the company to continue and grow. It’s uncommon to see a small business offering shares within the company because of lack of profit being able to be shared amongst shareholders. Companies choose to offer shares in their business because the investment that is made doesn’t have to be paid back to the investor.
Why is owning a share in a business a good idea?
Many people choose to buy a share in a company because of two simple things. The lump sum you pay means that part of the company is now yours, and you can either choose to buy a larger part, or stick with what you’ve got. Also, when profits are made, they are divided between the shareholders of the company. This is known as dividends, and many people like that safety net in their financial world.
Depending on the agreements of your share, you will also have votes within the business where you can contribute towards large decisions the company has to make. These are called prescribed particulars. There are many different rights that you have as a shareholder. What are company prescribed particulars? Read in detail on how much of an impact being a shareholder can be.
Sometimes though, companies create different kinds of shares where you may receive different profit and voting rights, so be sure to check all of this out before making an investment.
Can I sell my shares back to the company?
In short, yes. However, you will have to read the fine print that you signed when you bought your shares. There will be a section on how you can leave and sell your shares back to the company.
Often, this will be when you decide to retire or are leaving for a change in career. The business may have depleted and you may choose that you would like to sell your shares and get out of the company. Sometimes, people choose to sell their shares back to the company because they have fallen out with another shareholder and no longer want to own a share of the business.
Remember though, your share in the business may not be the same amount as your investment. What you will receive back if you do decide to sell your shares will depend on how well the business is doing at the time, and also how many other investors have joined since you did. For example, if you were one of four shareholders when you joined, and now you’re leaving you’ve discovered that there are double the amount of shareholders, it’s likely that your share won’t sell for as much as you bought it for.
To summarize, buying shares are generally a very good investment because it can bring peace of mind to people financially, and also give you the opportunity to earn more in later life, especially if the business kicks off. Why not buy some shares today?