Negotiations regarding the sale of shares are a complex and lengthy process. Thorough preparation, both in legal and business terms, saves time and money. Although the transaction is usually supervised by lawyers and business advisors, buyers and sellers should have at least basic knowledge of the legal mechanisms used to sell shares. Are stocks and shares isas safe?
Actions or … what?
When placing money in a bank, we are usually just a customer who brings cash, but the importance is subordinate. The bank pays pennies in the form of interest, and the real profits resulting from trading the cash register no longer share with us. Well, unless we’re not only a customer-depositor, but also a bank shareholder. Being a shareholder is a completely different relationship – having shares, we are de facto co-owner of the company, we have much more rights than as a bank customer.
What other benefits are there?
- the possibility of raising capital and faster development. In business, who stands still goes backwards. If you have a well-tailored business, but you are unable to achieve, for example, ten times larger scale (because you lack money), then someone else will sooner or later copy your model and overtake you.
- greater security than with a bank loan at the nape of the neck. Of course, you can go to the bank for development money. Loans are sometimes the only available form of capital, but contrary to appearances, they are not always safe.
- market valuation and premium for quality. By issuing shares – especially if they are listed on the stock exchange – you get a market valuation of your business, and if you run it well and have cool development prospects ahead of you, then investors will appreciate this promotion, valuing your work higher than it would result from “clean” numbers.
- the option of easily cashing shares (liquidity). As the only business owner, you only have two options – you sell it or you still manage it. At a time when a company is a joint-stock company and has various shareholders, you can buy and sell its “pieces” enjoying a fairly objective market valuation and liquidity of your money.
- credibility and ability to attract reputable shareholders. Credibility is one of the most important assets in business.
Risk and return
For most investments that you would invest in stocks and shares, value can go down as well as up and you can get back less than you invested.
The level of risk in your stocks and shares will depend on the investments you choose to invest in.
Am I protected if something goes wrong?
If something becomes very pear-shaped, your money is protected to some extent.
If your fund manager goes bankrupt and is unable to pay your money back, they should be covered by the financial services compensation program. In this case, you may receive compensation up to a certain amount. The only thing you are not protected against is a malfunctioning investment.