THE ADVANTAGES AND DISADVANTAGES OF EQUITY INVESTMENT
ADVANTAGES OF INVESTING STOCK MARKET
Once you invest in shares, you are entitled to receive a dividend from the company you have invested in.
Apart from the dividend, an investor can gain capital with the price rise of share and the rise in the market. Capital Gain is the other source of return on investment apart from dividends.
Whenever companies you have invested in require further capital for expansion or so they issue ‘rights shares’. Hence, an investor receives investment priority over other general investors.
At times, when companies make exceptional profits they issue bonus shares to its shareholders. Bonus Shares is a type of dividend. Bonus shares are free shares given to existing shareholders.
Investment in equities can be easily transferred or liquidated.
With stock-split, the per-share price reduces in the market which eventually increases the readability of share. In the end, stock split results in higher volumes with a number of investors leading to high liquidity of the share.
DISADVANTAGES OF INVESTING STOCK MARKET
Investment in equity is risky as compared to any other investment instruments. The money is invested based on the intuition of an investor in the company.
INSTABILITY OF STOCK MARKET PRICE
Stock market price of any equity share varies widely.