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Have you ever thought to have a business? Just say you want to have a business in the form of a store. What can you do to be able to have a store?

If you have capital, then you can buy or rent a building and buy products that will be sold. If your store is new, of course there are certain risks, such as your store is unknown by the community. This means that your store has not much visited by customers.

Then, as an alternative, why not try to buy another store that had already been established? You can pick and choose which stores you want to buy, and of course you will certainly choose the store that seems already well known and best-selling, is not it?

If so, then you should pay money to the owner of the old store at worth price to buy building (if the building was owned his own shop) and products therein. In other words, you have purchased ownership of the store where you buy is its capital.

SMALL FRACTIONS

Keep in mind, in the business world not only store that can provide benefits. Other businesses that do not form in stores also can provide benefits. The business usually is in the form of business entity, or the popularity of the term: the company. Same with the stores, company ownership can also be purchased. So you can choose which company is about always profitable in the past years, and you can buy ownership (capital) of the company.

Different from the store, in general, the capital of a company much larger than the capital of a store. For example, the capital of the store that you want to buy may be USD3,000 million, but the capital of the company that you want to buy can be reached USD 300,000.

The problem is, not everyone has $300,000 in cash. Maybe people have only $3,000, so this means he is just getting possession of one percent of all the holdings of the company. So how can he be able to buy ownership with only one percent capital?

By law, arranged in a way: the company's ownership is divided into small pieces called shares. For example, ownership of the company valued at USD 300,000 was divided into shares in which a given value of say $1. Thus, if you only have $3,000, then you can only buy 3000 shares.

ADVANTAGES OF BUYING SHARES

What benefits will you get by buying shares or ownership of a company?

The first, if the company had a profit, then usually you get a distribution of profits, called dividends. Take for example, if dividends you receive is $1.00 per share, then by 3000 shares you have, the total dividends you get is $3,000. Of course the amount of dividend benchmark varies from one company to another company. But more or less is the same principle. The more shares you have, the greater dividend you can get if that company's profits.

The second advantage, it could be the value of your stock rises. Again, we suppose you buy shares at $1.00. Well, if then more and more who want to buy shares of the company, then it might be the share price has risen so tell $1.4 per share. Thus, if you sell it, this means you get a gain of 40 percent. This profit is called capital gains. Where do you sell that shares? Not to companies that issue shares, but to others who do want to have these shares.

Of course, investing in shares are also at riskinvesting in shares are also at risk. Namely, the decline in stock prices that you have. For example, fell from $1.00 to $0.6per share. When you sell, then you will lose $0.4 per share. Losses like these so-called capital loss. Where do you sell? Also to others who really want to own these shares.