What is Stock? The type, characteristics, and advantages and risks of investing in shares

Human needs are increasingly increasing, as life needs increase one needs to also seek additional income. To find additional income there are many alternatives that can be used such as opening a side business, side jobs, to invest. Of the many alternative choices, one of which is investing. What ? Investation ? What is investment? Well investment is an investment in a particular securities or line of business. Investments can be made in various types such as mutual fund investments, property, gold or stocks. Now this time maskirno.com wants to discuss about stock investment. What is stock investment? Stock investment is a type of investment investment by buying shares of a securities company with the aim of getting profits from rising stock prices (capital gains) and from dividends (profit sharing).

Then why stock investment? Many people ask why do I have to invest in shares the answer is because: first "the inflation erodes your money" just imagine in 2019 50 thousand money can be used to buy 3 lumps of tempe but in the future maybe in 2030 50 thousand money can only be used to buy 3 pieces tempeh. This is what is referred to as "inflation". The existence of inflation is what causes the value of your money always decreases every year. To compensate, you can invest so that your assets increase and are not eroded by inflation.

Second "the difference in consumption and investment". Try to contemplate buying a car or land, buying a watch or stock, buying a cellphone or property. After a long time, the value of watches, cars and cellphones will decrease due to damage and so on. In contrast to land, property, and shares, their value can increase every year. So investing can protect our assets from the dangers of inflation.

Third "Assets increase by investing", is there an example? So like this, in 2010 Pak Jono bought a car worth 500 million after five years Pak Jono's car was reduced in value to 250 million while Pak Daman bought shares owned by PT. Astra International Tbk worth 500 million at a price of Rp100 per share after five years the share price of PT. Astra grew and increased to Rp5,000 per share, so Pak Daman's assets increased 50-fold to 25 billion. If you can choose, choose who? Mr. jono or pak daman? Surely you chose pak daman right?

After you read the reasons why you should invest in shares, what if we explore further what is stock. Agree? Okay Let's continue.

Stock is a unit of value or bookkeeping in various financial instruments that refers to the ownership portion of a company. By issuing shares, it allows companies that need long-term funding to 'sell' interests in business - stocks (equity securities) in exchange for cash. This is the main method for increasing business capital besides issuing bonds (debt securities).

Shares also have another meaning on the Indonesia Stock Exchange (IDX), the definition of shares is a sign of capital participation in a company or limited liability company. Because we participate in investing, we have a claim on company income, a claim on company assets, and are entitled to attend the General Meeting of Shareholders (GMS). Simply put, the stock is a kind of proof of ownership of a company / business entity. So, if you have shares, then we are part of the owner of the company. This is why shares are referred to as securities. Well because it becomes a valid proof of ownership of a company.

Stocks as an investment vehicle also have several types, namely:

A. Types of Shares in Terms of Capability in Claims Rights (Claims)

Common Stocks This type of stock has the characteristics of being able to make ownership claims on all income and assets owned by the company. However, the owner or shareholder of this type only has limited liability (only on the number of shares owned). The advantage is that if there is a worst risk such as a bankrupt company, the maximum loss incurred by the shareholders is the amount of investment in the stock.

Preferent Stocks (Preferrend Stocks) This type of stock is designed as a combination of bonds and ordinary shares. Some investors like the type of stock that can generate fixed income (such as bond interest). In general, the characteristics of preferred shares are the same as ordinary shares that can represent equity ownership and are issued without the due date written on the shares, and pay dividends. These shareholders can also make claims on previous profits and assets, keep dividends for the duration of the shares, and have redemption rights and can be exchanged (convertible) with ordinary shares. This makes this stock similar to bonds, and much sought after by investors.

The characteristics of ordinary shares

Has the following characteristics:
Responsibility is limited, only to the amount given
Shareholder voting rights can elect the board of commissioners
Rights take precedence when the issuing organization issues new shares

Characteristics of Preferred Stocks

Preferred stock has the following characteristics:

cumulative dividend, if it has not been paid from the previous period, it can be paid in the current period and ahead of ordinary shares

Claims on assets and income, have a higher priority than ordinary shares in terms of dividend distribution

Convertibility, can be exchanged into ordinary shares, if an agreement between the shareholders and the issuing organization is formed

Has various levels, can be published with different features

B. Stock Categories in Terms of Trade Performance

Blue Chip Stocks
These types of shares are sought after by investors because they come from companies that have a high reputation, as top brass in their industry, and have stable and consistent income in paying dividends.

Income Stocks
Is a stock of an issuer with the ability to pay dividends higher than the average dividend paid in the previous year. This type of stock is the main attraction for investors.

Counter Cyclical Stocks
This type of stock is the most stable when economic conditions are volatile because it is not affected by macroeconomic conditions or the general business situation. Illustration if there is an economic recession, then the share price is still high, where the issuer is able to provide high dividends. This can occur as a result of the issuer's ability to obtain high income during a recession

Growth Stocks (Well-Known)
Is a stock that is similar to blue chip, this type of stock has a high income growth, as a leader in a similar industry and is known as a company that has a high reputation. (Lesser-Known) Although not as a leader in the industry, this type of stock still has the characteristics of growth stock. Usually it is a share of a regional company and is less popular among issuers.

Speculative Stocks
Is a stock that consistently earns income from year to year, has a high possibility of income in the future, but it is not certain.

Defensive Stocks
Is a stock that has remained stable over a period or uncertain conditions and recession.

Emerging Growth Stocks
Is a share issued by a publicly-listed company that is relatively small and stable even though economic conditions are less favorable

C. Types of Shares in Terms of Transition

Shares on behalf of (Registered Stocks) on shares in the name of the shareholders whose name is clearly written on the paper and also how to transfer must also go through certain procedures.

Bearer Stocks are the opposite of shares in name. Physically, the owner's name is not written on the shares. It aims to be easily transferred from one investor to another. Many investors own these shares with the aim of it being traded. Investors do not need to worry because legally, who holds the shares, he is recognized as the owner and has the right to attend the General Meeting of Shareholders (GMS).

Objectives of Investing in Shares

One of the goals of the community to buy shares is to make a profit by:

1. Increasing the value of capital (capital gain).
2. Get dividends.

Benefits and Risks of Investing in Shares

Stock Investment Profits

Dividend
Dividends are part of the company's profits distributed to shareholders. Dividends are derived from profits generated by the company. Dividends are given after obtaining approval from the shareholders at the GMS. The amount of dividends to be distributed is proposed at the GMS. There are two types of dividends namely cash dividends and stock dividends:

1.Dividual cash means the company distributes dividends to each shareholder in the form of cash in a certain amount of rupiah for each share.

2. Individual shares means that each shareholder is given a dividend in the form of shares so that the number of shares owned by an investor will increase with the distribution of the stock dividends. However, there are companies that do not distribute dividends even though they make a profit, usually this company is in the growth stage, and its shares are included in the growth stock category. If an investor wants to get a dividend, then the investor must own the shares until a certain time has passed which is called Cum date Dividend. On the date of this dividend cum date, investors who own the shares will be listed and entitled to receive dividends. Cum date is the date of the last listing of which investors are entitled to receive dividends. If an investor sells the day after the date, that is, on the day of the date, he is still entitled to get a dividend. However, if an investor sells his shares before the cumdate date, the investor is not entitled to dividends distributed by the company.

There are several things to consider in reading information on dividend distribution:

1. Recording Date: The date on which the investor who holds shares when cumdate is recorded will be distributed to the dividend yield later

2. Payment Date: Date of dividend payment.

3.Cumdate: Date of the last listing for investors who want to get a dividend allowance.

4. Date: The day after Cumdate, who buys shares when Exdate is no longer entitled to get dividends.

Capital gain
Capital Gain is the profit obtained from the difference between the purchase price and the selling price of shares, where the selling price is higher than the purchase price. Capital gains are formed from trading activities on the stock exchange.

Risk of Investing in Shares
In addition to the various benefits gained from investing in shares, stocks also have their own risks. This risk must be ready to be faced by investors who play shares. There are several risks that are commonly experienced by shareholders. Some of the risks that may arise when investing in stocks are as follows.

Risk of Suspend
If a share is suspended or suspended by a stock exchange authority. Thus the investor cannot sell his shares until the suspended shares are revoked from the suspended status. The suspend period varies, usually lasting a short time, such as 1 trading day but can also take place within a few trading days.

Capital Loss
Capital Loss is the opposite of Capital Gain, which is a condition where investors sell shares lower than the purchase price. In stock trading activities, investors do not always get capital gains or profits on the shares they sell. There are times when investors sell their shares at a lower price than the purchase price (the simple language is overdrawn / loss), thus investors experience capital loss.

Do not get a dividend
The company will only distribute dividends if the company can make a profit. Thus the company cannot distribute dividends if the company suffers losses. Thus the potential profit of investors to get dividends is determined by the company's performance.

Risk of Delisting Stocks
Another risk faced by investors is if the company's shares are excluded from the listing of the stock exchange (delisting). A company's stock is delistered on an exchange generally because of a company's poor performance, for example in a certain period of time it has never been traded, suffered a loss of several years, and various other conditions in accordance with the listing rules on the exchange.

Bankruptcy and Liquidation Risk
If the company is declared bankrupt and the company is dissolved, it will have an impact on shareholders. In accordance with the rules of listing shares on a stock exchange, claim rights from shareholders usually get the last priority after all company obligations can be paid off to creditors and bondholders. If there is still left over from the sale of the company's wealth, then the remainder is divided proportionally to all shareholders. But if there is no residual wealth of the company, then the shareholders, will not get anything. This is the greatest risk for shareholders. For this reason, investors must monitor the companies whose shares are bought.


Then How to Start Saving Stocks? Here are six steps you must take to start saving stocks:

1. Open a securities account at a Securities Company

2. Determine the nominal funds provided for saving shares

3. Determine the shares you want to save

4. Deposit funds regularly every period

5. Buy shares regularly every period

6. Start saving shares

Terms in Stock Transactions

Shareholder (shareholder or stockholder), is a person or legal entity that legally owns one or more shares in a company. The shareholders are the owners of the company. Companies listed in the stock exchange are trying to increase their share prices. The concept of shareholders is a theory that companies only have responsibilities to their shareholders and their owners, and should work for their benefit

The stock market is a market for trading in publicly held company shares and related financial instruments (including stock options, trading and stock index forecasts).

Stock index
Price movements in the market or parts of the market are captured in a price index called the stock market index, which includes the Standard and Poor's Index, the Financial Time Index. Indices like the one above are usually measured by market capitalization.

Capital market
is an activity related to public offering and trading of securities, public companies related to the issuance of securities, and institutions and professions related to securities