Ejercicios para mejorar tu espalda y tu postura

What are shares? Easily explained for beginners 

History shows: Innovations require vast amounts of capital. However, individuals and even companies can hardly raise such sums on their own. So where do you get the money you need? Loans as a source of capital have to be paid back with interest and are associated with all kinds of obligations. And corporate bonds hardly offer any advantages here. As an alternative, therefore, shares were developed with which other people can participate financially in the company.

Today, shares are popular financial products - several thousand shares can be traded worldwide. Share trading is correspondingly differentiated and complicated.

We therefore explain the basic functioning of shares and answer important questions such as "What are shares?" or "How do you earn money with shares?

At the beginning there is understanding. In the first section, we therefore provide you with basic knowledge about shares so that you can make concrete decisions on the basis of this knowledge.

What is a share?

Shares are financing instruments for companies to raise more equity capital apart from loans and bonds. For this purpose, the share capital is divided into many individual shares and thus offered for sale to a broad public. This means that each individual share certifies the share in a company that a buyer acquires.

Many newcomers to the stock exchange still have a stylistically elaborate document in mind when they hear the term "share". In most cases this is also true - with the exception of the ornamentation. The shares defined by the public limited company are printed either in a global certificate or as individual securities. When these securities are put on the market, it is called a new issue. If the company later needs further capital, it can issue additional shares in the course of an issue. Buyers of these shares are called shareholders.

Which shares are there?

Different securities are traded on the stock exchanges. Shares are one type of security. In addition, there are funds, ETFs, bonds, currency pairs and cryptocurrencies, which differ from each other in their type and mode of operation.

Shares themselves are again divided into four types, which define different rights and nominal values:

1. bearer and registered shares

Bearer shares make up the majority of shares traded in Germany, as they are very easy to buy and sell.

After a successful sale, the new owner automatically has all shareholder rights. The disadvantage is that the public limited company does not know its own shareholder structure and has more difficulty protecting itself against hostile takeovers.

Registered shares do not have this disadvantage. The shareholder legitimises himself by entering his name, address and date of birth in the share register. Shareholder rights can therefore only be exercised by those who are entered in such a register.

2. par value shares and no-par value shares

Par value shares certify a fixed value. Each share can have a different value. In contrast, no-par shares divide the share capital into equal shares. The value is therefore measured by the total number of all shares.

3. ordinary and preference shares

Ordinary shares (or type A shares) include all shareholder rights. In addition to the right to information and the subscription right, the voting right at the general meeting is of particular importance. Therefore, ordinary shares are very interesting especially for institutional investors. For private investors, on the other hand, the voting right offers hardly any benefit. Their shares in the company are so small that their vote at the general meeting would carry no weight at all.

Preference shares (or type C shares) are cheaper at https://exnesslatam.com/social-trading/ than ordinary shares. However, this apparent advantage hides a serious disadvantage: preference shares do not carry shareholder voting rights. This shortcoming is compensated for by a somewhat higher dividend.

4. young and old shares

As the name suggests, old shares have been in circulation for some time. However, they bring their owners a decisive advantage: holders of old shares can exercise their right of first refusal and preferentially buy new shares. These young shares are newly issued in the course of a capital increase.