Definitions Of Equity Investment
Most of the investing in the US is done in the stock market and these investments are usually associated with equity investments. Even if a person does not invest directly into equity and keeps the money in the bank, then too the person is directly involved in equity investment via the bank. So, what is equity investment?
This investment is a long term investment in stocks where the profits are given in the form of dividends and capital gains that get accumulated for a particular stock.
It has been seen that most investors do not really hold securities or certificates. Rather, they do their investments through their bankers or fund managers who are the actual people to have access to the certificates. Thus, the person gives the capital to a company in lieu of a percentage of ownership in a company. This is known as equity investment. In other words, equity investment is like a loan that a person makes to a company and this loan has to be repaid by the company. The repayment can be done by giving the person dividends which come out from the profits of the company or by giving the person a percentage of ownership in the company.
Where property is concerned, one can also do equity investment. In this case, one first has to understand what is equity in real estate. Here the value of the property is taken into consideration and from this the debts owed on the property are subtracted. The resultant figure is the equity in the property. Based on the equity present in a property, a person can take a line of credit or loan. Here the lender of the loan or line of credit will be doing an equity investment.
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