Fixed income investments supplement our primary income. You can also use it to help you in retirement. more Before you invest in shares, it is important to know the benefits and rights of each type.

Have you ever wondered what fixed-income investments are? There are many companies that offer securities to the general public. We’ll be talking about shares today.

Shares and the benefits they bring

1. You can use them to save money for future needs.

2. They can be used as collateral for loans with financial institutions.

3. These assets are highly liquid and can therefore be purchased or sold for a profit.

What is a share, then? A share is a unit for ownership of a company. You own a part of the capital, which is the lifeblood of a company when you purchase shares. Your investment goal should include safety if you want to be a wise investor. You must buy the correct type of shares, from the right company. Why? Why?

Dividends that are frequent and justifiable

(2) Invest in an organization that has a good management and is productive.

Protect your interests.

Shares are classified into two general categories.

1. Preference

They are those that have a privilege in terms of the payment of dividends or return of capital as compared to any other type of share. This type of share is divided into:

A. A.

The amount of unpaid shares is carried forward in arrears. Dividends are paid the year after before equity shares receive any dividend.

Non-Cumulative Preference shares

If the company has no profits that can be declared as dividends then this category is not entitled to any arrears for unpaid dividends.

C. Participating Preference shares

Dividends have a fixed amount. After all other payments, the surplus net profit is paid to them.

Non-participating Preference Shares

They only receive a fixed dividend, and no surplus profit is paid.

Redeemable preference shares

The company may redeem the vouchers at its own discretion, depending on their terms.

F. Irredeemable preference shares

The company can redeem the vouchers at any time in its lifetime.

G. Convertible Preference Shares

If the company offers this option, they can be converted to equity shares in a certain period of time.

H. Non-Convertible Preference Shares

These shares are not convertible into equity shares.

2. Equity Shares (Ordinary shares)

Investors who own equity shares are the true owners of a company. These shares are considered real ownership because they come with voting rights. Once they are owners, investors can control the affairs and management of the company. Investors do not enjoy preferential rights with respect to the annual payment of dividends, or the return capital during the winding-up of the company.

They are at high risk of not receiving dividends when their company is not profitable. If a company goes bankrupt, they have a right to its assets.