Every investment or business is faced with advantages and disadvantages. The advantages and disadvantages will also differ from each investment instrument we choose. Investments with minimal risk usually offer relatively small returns, in contrast to investments that are high risk but generate large returns. Those of you who are already interested in investing in stock instruments are obliged to study the benefits and risks. Visit our website to find out various things about stocks, forex, and The Volatility 75 Index.
Advantages of stock investment
As explained in the table above, the advantages of investing in stocks are dividends and capital gains. What does it mean?
Dividends are the distribution of profits or profits to us as shareholders. Usually, dividends are distributed per quarter or can be distributed annually. The amount depends on the company policy itself. There are two types of dividends, namely cash dividends and stock dividends:
• Cash dividend means that the company provides cash for each share to shareholders.
• Stock dividend means the dividend the company gives in the form of shares, so the number of shares owned by investors will increase.
2. Capital gain
Capital gain is an increase in the value or price of a share. You can only get this advantage when the shares you hold are sold, at a price higher than the price when you bought them. The difference between them and that’s your advantage.
3. Share ownership rights
By investing in stocks, you can become part of a co-owner of the business. Shareholders also have the right to attend the General Meeting of Shareholders (GMS).
4. Transparent information reporting
Management and regulation in the stock market are well done and transparent. Starting from the appraisal, pricing, to financial reports.
Disadvantages of stock investment
1. Capital loss
A capital loss is the opposite of capital gain, that is, the value of shares held by investors will decrease due to market fluctuations. This loss will only be experienced when investors sell their shares which are experiencing a capital loss.
Another risk of investing in stocks is that the shares we own are suspended or suspended from trading by the Indonesia Stock Exchange (IDX). The causes of the suspension are various, but generally, they are caused by a serious case involving a company that issued its shares on the stock exchange.