Equities

Equities, also known as shares or stocks, are the most popular asset class among private investors. By purchasing shares, you become a co-owner of a corporation and thus acquire voting and property rights. Important rights include voting rights at the general meeting and entitlement to a share of the dividends. Shareholders participate in the success of the company both through distributions and potential price increases.

When a public limited company issues shares, it raises equity capital on the capital market. Shares in listed companies are traded on the stock exchange.

What types of shares are there?

There are four different types: common shares and preferred shares, as well as bearer shares and registered shares.

• Common shares are the regular shares.
• Preferred shares often do not carry voting rights, but they do carry a preferential or higher claim to dividends.
• Bearer shares belong to the holder without the person's name being entered in the share register. Nowadays, bearer shares are mostly managed electronically, especially in the case of listed companies.
• In the case of registered shares, the stock corporation itself keeps a register of the owners. When a share is sold, the share register must be updated accordingly. In the case of restricted registered shares, the company's consent is also required for the transfer of the share.

Long-time investor Warren Buffett believes that a share is not simply a security that you buy and sell to profit from short-term price fluctuations. His mentor Benjamin Graham coined the philosophy that a share represents ownership of a company, which requires shareholders to think entrepreneurially.

True Wealth CEO Felix Niederer discusses this topic in more detail in the video podcast «The most popular asset class: equities.»