If you own shares of one or more companies you can be considered rich. In fact, however, the situation is not obvious. As a shareholder, you are not doomed to failure in advance, but your financial status is determined mainly by the profitability of shares included in your investment portfolio.

What is a share? Simply put, a share is a security that confirms the right of a shareholder to participate in the ownership of the enterprise (joint-stock company) that issued the share. In connection with the purchase of shares, you are entitled to certain rights:

— property rights, such as the right to receive dividends, the right to participate in the distribution of assets in the event of liquidation of the company and the preemptive right to purchase shares of a new issue, and
— non-property rights, including the right to vote, the right to attend all general meetings of shareholders, the right to challenge resolutions of such meetings and the right to obtain information.

By issuing shares, companies attract capital, while shareholders, as long as the company shows profits, can count on certain benefits. The most important advantages of investing in shares include:

— You can potentially earn higher returns than with bonds or bank deposits. It is possible to give examples of companies whose shares have risen by hundreds or even thousands of percent during several years of trading, i.e. each dollar invested in a given company could bring even 5 to 50 dollars. Spectacular stock market rallies usually drive demand among investors who also want to increase their profits. Unfortunately, such “profitable” shares are extremely rare. However, it is worth counting on such opportunities. The return on investment from shares can be much higher than that from bonds or term deposits.
— You can get a dividend. The acquisition of shares gives you the right to a certain amount of the company’s assets. This means that you can count on the resulting benefits. One of them is the right to receive dividends. In simpler terms, you are entitled to participate in the distribution of the company’s profits in proportion to the number of shares held. Therefore, the more money you invest, the more you receive in dividends.
— You have investment flexibility. You can buy and sell shares at any time according to your needs and preferences. You can actively respond to market changes by modifying your investment portfolio. You yourself are responsible for the final result, regardless of whether it is a profit or a loss.

Unfortunately, investing in shares also comes with substantial risks. The most important are:

— Continued gains are not guaranteed, you may even suffer significant losses. This is probably the biggest disadvantage of owning shares. You can expect above-average gains, but you also have to reckon with serious losses.
— The stock market is unpredictable. Prices fluctuate based on supply and demand. In order to effectively „play the stock market”, you need to have a lot of knowledge and even more experience. There is no denying that the investors who can see beyond short-term market volatility are the most successful.

Investing in shares has both advantages and disadvantages. Whether or not it will be beneficial for you depends primarily on your knowledge and experience, but also on a bit of luck. And, of course, it requires patience, but you probably already know that.