Investors Concern on corporate actions

Corporate actions are those activities that bring about significant change in the organization. These actions are initiated by the public company which will change the capital structure of the organization. The main changes caused are to the debt and equities issued by the company. These actions are bound to cause changes in the share prices of the public company. There can be both positive and negative impacts on the share prices and hence it is important that the investor be aware of how these actions might affect the value of his investments.

Types of corporate actions

Corporate actions can be categorized into two categories – mandatory and voluntary. The mandatory actions are initiated by the board of directors and may not require the action or consent of the shareholders. The mandatory actions may include mergers and acquisitions, stock splits etc.

Voluntary corporate actions, on the other hand, are initiated by the shareholders. These actions cannot be executed without the consent of the shareholders. These include tender offers, Rights Issue and Buybacks.

Under the umbrella of these two categories fall the different types of actions

Conversions – This is when the company aims to convert its securities from one class to another. Investors are more interested in taking part in the company’s long-term appreciation. The public companies may issue preferred stock which does not have ownership rights with the option of converting it into common stock at a later point in time. The Shareholders go in for this arrangement to when there is a rise in the company’s equity value.

Rights Issue – This arrangement is for the existing shareholders who are willing to increase their stake in the company. Additional shares are offered to the shareholders at a discounted price. Companies go in for this option to raise additional capital.

Stock Splits – This corporate action increases the number of shares but does not affect the value. The existing shares of an investor will be doubled if the company announces a 2-1 split. This aims at reducing the share price to attract new investors.

Dividends – Dividends are a part of the profits that are distributed to the shareholders. This is not a fixed payment and depends on the financial conditions of the company. This is initiated by the board of directors.

Mergers and acquisitions – These actions are part of the company’s plan for expansion, diversification or entering new markets. These actions definitely affect the shareholders as it will lead to considerable changes to the financial structure of the company.

The investors need to keep themselves updated on the potential actions the company has planned for. It can affect him both ways. It can lead to an appreciation of the stock or vice versa. The investors can also look in for investment opportunities in the digital assets market as they are less time to consume. The automated trading systems make the idea of investing in cryptocurrencies more lucrative and easy. Bitcoin loophole is one such online trading software that offers trading opportunities for all types of investors irrespective of their financial knowledge. Bitcoin Loophole is not a scam but it is an efficient way to financial prosperity.

 

Why should you teach your adult children to be independent?

A growing trend in recent years is of children returning home after college and staying with their parents. They are called the “Boomerang Generation.” While the parents are happy to have their children back it does add to the expenses of the family and that needs to be looked at.

From the perspective of the Boomerang generation staying with parents is an advantage as they do not have to pay the rent and their meals will be taken care off. It gives them the opportunity to further their prospects either by studying further or learning other skills. Some of them actually start saving for their retirement. But many of them do does not attempt to take up any job as their basic needs are met and this does not augur well for the family.

What should be done?

The solution is not as simple as it appears because emotions are involved. Parents are often caught in a web of emotions and finances unable to say, “no“ to their kids nor being able to convince them to contribute to the family expenses in some form. But for the wellbeing of all involved, this needs to change.

Parents must talk to their kids about their long-term goals-

  • what do they plan to do in the future?
  • How do they plan to supplement their income?
  • How long do they plan to stay with the parents and so on?

At the same time, parents must talk to the children about their financial goals and how they plan to save for their future. One interesting piece of advice would be to invest in a small way in the cryptocurrency world through a trading robot like the QProfit System. Of course, they must proceed with caution and only when the question, “Is it Safe?” is answered should they proceed.

Ask for rent

While it might appear inhuman to ask your own children for rent, it will instill a sense of purpose in them and will motivate them to start looking at options to get a job and earn some income.

Plan a financial goal

There are still several households where the parents help with the basic expenses and bills. As a parent it is your responsibility to ensure your children learn the importance of savings and have a visible goal ahead. Sit down with them and plan the expenses and savings.

It is only when you teach your kids to be financially independent can they hope to have a future that is debt free and financially stable in their old age.