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What the heck is a stock warrant anyhow?

May 15th, 2009 at 04:43 am

A stock warrant is a certificate issued by companies that gives the holder the right to buy a certain number of shares at a particular price within a specified time frame. There are two different kinds of stock warrants. One is called a call warrant and that is the one just mentioned. The other is called a put warrant and gives the holder the right to sell a specified amount of equity back to the issuing company within a certain time frame. On each stock warrant certificate will be written the expiry date, which is the last day that the buy or sell may take place. There are two classes of stock warrant certificates; those whose equity can be bought or sold at any time within, up to and including the expiry date, and those where the buy and sell equity can only be exercised on the actual date of expiry.

While a stock warrant mostly represents shares in a company, it can also represent other investment types such as currency, index or commodity. When the stock warrant is bought or sold, the price paid is called the exercise or strike price. It is usually much lower than the normal price of the shares represented. The stock warrant is a high-risk, high return investment tool. Those considering investing in stock warrants should realize that their losses can be much greater if things go wrong than if they invested in ordinary shares.

Investing in Stock

March 23rd, 2009 at 01:44 am

When you invest in stocks and shares you are virtually buying a piece of the company. This saves them the cost of borrowing the money they need and it gives you the right to participate in their success by being paid a dividend at the end of each year, or by the value of your stocks increasing, so that when you sell them you make a profit.

There are two more ways you can benefit financially by investing in stock. Firstly, when you are paid a dividend, it is with money that has already been taxed. Therefore, you receive what is called franking credits that you can use to offset tax you may have to pay on other income. And secondly, if you hold those stocks for more than twelve months, you will receive a 50% reduction on the capital gains tax that you must pay.

Stocks and shares usually have good liquidity - meaning that if you need to, you can get your money out of that investment in as little as three days. When you compare this with the time it takes to get your money when selling real estate for example, you will see that investing in stock is a good way to put your money to work

Wanna Trade Shares?

March 19th, 2009 at 03:43 am

Share trading is when you buy and sell shares on the stock market. The whole idea of buying shares is to make money, but when you buy and sell you are charged a fee, so this will eat into your profit if you do it too much. Many investors simply buy the shares and keep them for several years. They can make money in two ways; by selling the shares after they have increased in value and/or by getting a dividend from the company they have invested in.

Ideally they would have invested in many more than one company. If an investor only buys shares in one company and it goes bust, then he has lost his entire investment. But if he has invested in a number of companies then he will lose only a part of his investment. Of course, the reverse is true too. If one of his investments does extremely well he won’t get as much out of it as if all his money had been with that one company.

Some investors who know a lot about Share trading - and many others who simply think they do - like to trade shares quickly. That is, they buy shares while they are at a low price, and then sell them once they start to rise. The trick is to pick the right time to sell. Shares can rise and fall at the drop of a hat. If you leave it too long to sell, they might tumble overnight and you will sell at a loss.

But if you sell too quickly the value may keep on rising and you have denied yourself the chance to make quite a bit more profit. This kind of share trading is quite risky. Very few people can accurately predict the market to the correct extent. They risk losing everything they’ve invested and maybe even more. Of course it is also possible to make a great deal of money too.

The best thing to do is think about what sort of risk you are comfortable with and how much money you can afford to lose. This may depend on a number of factors. A person who is quite young will have time to recover his losses in share trading, while an older person may not have that amount of time to spare.

Or you might be lucky enough to have a large disposable income, so you are comfortable with a large risk. You may know quite a bit about investing and so are more likely to make the right decisions at the right time. It really depends on the individual.