In the investment space, there are several securities that you can trade at the stock exchange. When you open a demat account as a new investor in the securities market, you may come across different types of shares. ‘Ordinary Shares’, ‘Common Shares’, ‘Equity Shares’ or ‘Common stocks’ are the shares that are generally purchased in bulk in the equity markets by demat account holders for share trading.
Demat account holders who purchase ordinary shares gain a percentage of ownership in the company. For example, Say the company has 10 common shares. If you buy 5 shares, you receive 50% of shareholder ownership in that company. Ordinary shares can be shares of publicly-held companies or private companies.
With the help of a demat account opened with a trusted service provider such as Tradebulls, you can buy, sell or hold common shares of listed companies in the Indian stock exchanges. ‘Preferential shares’ and ‘Differential Voting Rights’ (DVR) are other types of shares that exist in India. Ordinary shares offer much more than profitable sales.
Let’s explore how demat account holders can increase their earnings with ordinary shares.
5 benefits of ordinary shares
If you have purchased ordinary shares of a company, you are entitled to small dividends when the company makes profit. Sometimes, demat account holders with common shares earn very good dividends when the company performs well.
- 2.Voting rights
As a shareholder of the company, you have the right to one vote in company matters as per the shareholding policies. You can use this right for voting at the company’s annual general meeting.
- 3.Profit on sales
Ordinary shares are purchased in bulk by investors and stored in the demat account. Based on the growth of the company you invest in, you can sell these shares from your demat account at a better rate, at the right time.
- 4.Equity Capital
The equity capital gathered by the company doesn’t go back to the investors. But when the company winds up, the equity share holders get some returns from the equity capital. These returns can be claimed after the company has settled its obligations and paid the preference shareholders.
Also, in case the company’s share price drops, it can go as much as zero. This means that you will only lose what you spent on the shares, and nothing more than that.
- 5.No maturity date
Ordinary shares do not a have maturity date. You can buy and keep the shares for long-term investment returns. You can also buy these shares and pass it on to your family members, when you grow old or whenever you wish to do so.
To learn more about ordinary shares, visit this Investopedia page:
Although ordinary shares have their own set of benefits, preference shares and DVR are more valuable than ordinary shares. Many demat account owners have taken calculated risks and benefited with investment in ordinary shares. Why don’t you explore investing in ordinary shares too?
Begin your online share trading journey by opening a demat account with Tradebulls, a leading equity broker based in India. To learn more about trading in the equity markets, visit https://www.tradebulls.in/equity-and-derivatives
Still need more information on ordinary shares? Post your question in comments.