Companies issue shares in order to raise money. These funds then enable the company to undertake activities and investments or to ensure that it complies with its legal obligations.
If you buy a share in a company, you become a part-owner of the company's capital. As a rule, this also entitles you to a vote at shareholders' meetings as well as a dividend (if the dividend is approved by the shareholders' general meeting). This is money that the company pays out to shareholders if it has made a profit. Shares may be listed on the stock exchange, but this is not necessarily the case. At ABN AMRO, you are investing in listed shares.
The value of a share depends on the company's performance and developments on the financial markets. The return, if any, on the shares consists of the share increasing in value as well as any potential dividends. In short, shares offer an uncertain return. Investing in shares is attractive if you want to have a chance to earn a higher return than for other asset classes, such as bonds.
Investing your money in shares involves more risk than investing in other asset classes. If the company in which you own shares is doing badly, the value of your shares will fall. In the event of bankruptcy, your shares may no longer be worth anything at all. The price of shares can be very volatile.
In order to reduce the inherent risks of investing in shares, it's always advisable to make sure you have sufficient diversification. This can be achieved by investing in shares of companies from different regions, in different sectors and in different currencies.
Below, we have listed the main risks of investing in shares for you:
For a recent overview of costs and taxes, please consult our list of charges.
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