Buying Stock and Investment

What is a Stock

A stock is an equity investment. This means that proud ownership of a company you believe is a good investment. So if you invest in a stock, you have an ownership stake in the corporation that issued it, or offered it for sale.
The size of that stake depends on the number of shares you own compared to the total number available.

Why buy stock

Ownership has its privileges
As a shareholder, you have some basic rights. You can vote for or against the candidates who’ve been nominated to the company’s board of directors. They’re the people who set company policy and choose the chief executive who runs the business. You can also vote for or against proposals the directors or other shareholders make to influence what happens at the company and how it is managed. You also have the right to sell your stock at any time – although you may choose to hold onto it for years.
But in reality, shareholder rights probably aren’t the reason you buy stock. The reason is to make money by investing in companies you believe will make money. In the language of investing, you’re seeking a positive return.

Key Benefits of Investing In Stocks

Build. Historically, long-term equity returns have been better than returns from cash or fixed-income investments such as bonds. However, stock prices tend to rise and fall over time. Investors may want to consider a long-term perspective for their equity portfolio because these stock-market fluctuations do tend to smooth out over longer periods of time.

Protect. Taxes and inflation can impact your wealth. Equity investments can give investors better tax treatment over the long term, which can help slow or prevent the negative effects of both taxes and inflation.

Maximize. Some companies pay shareholders dividends or special distributions. These payments can provide you with regular investment income and enhance your return, while the favorable tax treatment for Canadian equities can leave more money in your pocket. (Note that dividend payments from companies outside of Canada are taxed differently.)

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