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Investing in Shares

 

The investor might choose to invest in the shares of a company in which case the business would be largely free to use the funds as it chooses.

It should be noted however, that in cases where companies invite subscriptions to their shares, they often specify the purposes for which the request is being made and therefore what the additional funding will be used to accomplish.

Although they are perhaps not obligated to then apply such funding as they previously stipulated, not doing so might increase the difficulty which they might face should they then apply for investment at a future date.

In most cases, the returns to a shareholder are not guaranteed and might fluctuate over time. They are usually last in the order of distribution of excess funds the company might have.

Typically, loans, debentures and other security based investments are paid before a distribution is made to shareholders.

The risk of owing shares is therefore greater, although the potential rewards usually out-weigh those associated with safer fixed return investments.

 
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