By Dr. Harry Hamann (MBA), August 30, 2022

What are Equity Shareholders ?
And why does it matter for Wealth Creation.

What are Equity Shareholders ?

Do you wonder what Equity Shareholders are? Let us understand this.

1) Ownership of Valuable Assets

Equity simply means: you are the owner! You can be the owner of your business, of certain stocks, you can own real estate, gold, bitcoin, rolex watches, or any other type of valuable asset. So, equity just means ownership of valuable assets.

To be a Shareholder specifically means you own a part (or all) of a company. This can be your own business or any other company (e.g. Apple shares).

What is the advantage of equity ownership? Equity shareholders take home profits of assets. Profits from businesses and stocks can be paid out to equity shareholders as dividends. If you own real estate that you rent out, you will receive rental income.

For Gold and Bitcoin (Crypto) you are entitled to the profits from appreciation (a rise in the price of the asset).


2) Equity means Net Worth

Another way to define equity is to simply sum up all of the asset someone owns and deduct the liabilities (=loans). If someone has $500K in assets and $50K in liabilities, their net worth or equity is $450k. Writing down these numbers for yourself is important. This will help you improve your personal finances, especially if you plan for retirement. You can calculate how quickly your wealth, equity or net worth grows with this tool.

Why is Equity essential to build Wealth?

Equity shareholdings are an important way to create wealth. Here is why.

1) Learn how to Invest to Create Wealth

Equity shareholders own equity through multiple assets. They build their wealth by generating an investment return from those assets. The upside potential for Wealth Creation is unlimited here. In other words: an investor is using his money to buy assets and become the equity shareholder and be entitled to receive investment return by appreciation and cashflow of assets. That is why you want to learn how to invest to create wealth.

Employees on the other hand typically own no equity but gets a paycheck. He exchanges time for money. It is almost impossible to create true Wealth that way.


2) Accumulate Assets with highest Investment Return

You really want to become an equity shareholder. Accumulate valuable assets such as public stocks, private equity (e.g. angel investments), real estate (e.g. rental property), precious metals like gold and silver, and also crypto assets (e.g. crypto currencies such as Bitcoin or Ethereum). You always want to acquire assets which offer the highest investment return while limiting your downside risk.

I explain what equity shareholders are in more detail in the video below.

Finally, if you wonder where to learn how to invest check out this resource to get started.

I hope this was helpful to you. Until next time.

Best,
Harry

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