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Long-term investments (Shares (Income comes from dividends and profits…
Long-term investments
Shares
Income comes from dividends and profits made from selling shares. Shareholders also receive capital gains as shares increase in value over time
Shares are long-term due to their value being reliant on performance of the company that issued the shares
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Business owners and operators invest in shares to provide long term returns on business funds, monitor competitors and merge targets
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3 types of shares: Ordinary shares, preference shares, bonus shares
Debentures
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Unlike shares, they do not carry voting rights or dividends
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Summary
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With stronger balance sheets and higher non-current assets, financial institutions are more likely to provide loans
Provides and income stream to offset ongoing costs of non-current asset purchases or business growth.
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Trusts
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The trust is governed by a trust deed which includes details of the duties of the trustee, purpose of the trust and how income will be distributed
Term deposit
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Used to provide long term reliable income to finance business operations or purchase of a non-current asset
Unsecured notes
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If finance company fails the note, holders will lose their investment and will be last on the list of repayments if liquidation occurs