The rewards
Now, if there weren’t some rewards for owning shares, you wouldn’t buy them would you?
It’s fair to say most people want capital growth from their shares. If a company is successful and increases profits over time, then its value should rise. In other words, the share price should go up.
But capital growth is not the only incentive. Dividends—the income paid by companies to shareholders twice a year—can often make up a significant proportion of your total return. And when you take into account the tax benefits attached to dividends, they should not be ignored. Thriving businesses usually increase dividends over time, too, something that cannot occur with fixed interest investments.
And for the idealistic, there is a final, less tangible reward for owning shares. There’s something peculiarly satisfying about being part of a successful enterprise. You, as an indirect provider of capital, are helping to create jobs and contributing to Australia’s economic growth.
In a successful business everyone wins—employees, shareholders, and even the country itself. The question, then, is how are you going to invest in businesses. Are you going to do it yourself or are you going to pay someone to do it for you?
