Shareholders and Investors

What are Shareholders?
If you invest into a company by buying shares in that company, you become a shareholder. If you are a shareholder, you have the right to a share in the profits of the company and in theory you also have a say in the running of the company when you attend the various shareholder’s meetings.

As a shareholder you will be looking for success in your company so that the value of your shares increases, and the dividends paid out will be sufficient to meet your projections.

It is this increased profitability in earnings that investors look for, because it is reflected in the dividend paid out in one form or another.

When a private company decides to form itself into a public company, it will register with the Stock Exchange and float its shares to the public. This effectively means that the shares in that company can now be bought and sold by the public through the exchange.

The company is not borrowing from the public; it is offering part ownership to the public in the way of shares.

What are Investors?
USA investors mostly invest in their local companies. It is estimated that over 50% of people have some form of share ownership, although this could be either directly, or through managed funds, or super schemes.

In the US the number of individual shareholders has increased over the past years, particularly when some larger government projects came online, inviting the public to take part.

The US Government has been pushing to get Americans to invest in shares, so they can provide for their own retirement, with less reliance on government-funded welfare.

Unfortunately, rental properties and similar investments have become less appealing because of the capital gains in the USA, due to low inflation, so more and more people are beginning to consider other forms of retirement saving. One of these is investing in companies.

Requirements of an Investor
In order to become a successful investor, you need 3 requirements:

1. Financial education.
2. Financial experience.
3. Surplus cash.

These three ingredients are important if you wish to have control over your hard-earned savings.

The fundamental things to do with proper management and successful investing are to do with the control of your money and not the other way around. In other words, you have to be fully aware of the best options available to you for your savings, and you need to understand the implications of the investment options you select.

All three of the above components are required together. Having excess cash without education and experience could mean a loss if you blindly invest into areas that have not been fully investigated. You must be aware of the financial aspects of investment; because your goal is not only to make money (from the money you have invested), but also to ensure that the investment money is safeguarded and hopefully increasing in value.