Hello to all! I hope you all are good.
So this post is basically for all my buddies out there who are curious about share investments.
A company’s wealth is divided into several parts. Shares is one
of its parts that is used in the financial accounting of the company.
You use the word ‘shares’ when referring to ownership
certificates of a particular company. The word ‘stocks’ is used when we refer
to ownership certificates of any company.
Shares have a monetary value. When we purchase shares for a particular value. While we are the owner of the shares, the company’s growth will affect the value of the shares. We can sell the shares at the right time for a higher value and get maximum returns from the sale.
Share market is the marketplace where we meet buyers and sellers for trading in shares and stocks. Companies contact the share market start selling their shares and the market issues the shares for trading.
It all started with the Indian stock market which operated around banyan trees where buyers and sellers met to trade stocks. In 1854, they moved to Dalal Street which is now popular for the oldest stock exchange in Asia i.e. the Bombay Stock Exchange (BSE). The BSE became the first stock exchange in India and played a significant role in the growth of the Indian stock market.
Later in 1992, the National Stock Exchange (NSE) was established. NSE was the first exchange in the country to provide a modern, fully automated screen-based electronic trading system which offered easy trading facility to the investors spread across the country.
One of the obvious benefits is that they allow firms/corporations to secure long term finance that will allow them to undertake new projects and grow. The bigger benefits however accrue to investors, who can participate in the growth of these companies by investing in their shares.
In the Indian stock market, two exchanges, the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) play important roles. Most companies trade their shares on either or both of these exchanges. This provides higher liquidity to investors because average daily volumes are high. Therefore, if an investor wants to buy or sell any product on the stock exchanges, this liquidity makes it easy.
The stock market offers different financial instruments, such as shares, bonds, mutual funds, and derivatives. This provides investors a wide choice of products in which to invest their monies. In addition to providing investment choices, this flexibility is beneficial in mitigating the risks inherent to stock investing by enabling diversification of investment portfolios.
Compared to other investment products like bonds and fixed deposits, stock investing provide investors an excellent possibility of making greater returns in comparatively shorter time periods. Adhering to the stock market basics, such as planning the trade, using stop-loss and take-profit triggers, doing the research and due diligence, and being patient can significantly mitigate the risks inherent to stock investing and maximize the returns on share market investments.
Even if an investor acquires a single share in a company, he acquires a portion of ownership in the company. This ownership, in turn, provides investors the right to vote and offer his contribution in the strategic movement of the business. Although this may seem like an exaggeration, it is true and there are several instances when shareholders have prevented company management from making unreasonable decisions that are detrimental to their interests.
The Indian stock market is regulated by the Stock Exchange Board of India (SEBI). The SEBI has the responsibility of regulating the stock exchanges, its development, and protecting the rights of the investors. This means when investors invest in financial products on the stock market, their interests are well-protected by a regulatory framework. This significantly helps in reducing risks due to fraudulent activities of companies.
Technical development has influenced every aspect of modern living. The stock exchanges are also using various technical advancements to provide greater convenience to the investors. The trades are all executed on an electronic platform to ensure the best investment opportunities to investors in an open environment. In addition, broking service providers offer online share trading facilities that make investing convenient, because investors can place their orders through a computer from the comfort of their homes or offices. The demat account makes it easier for investors to hold all the products within their investment portfolio electronically in a single location, which makes it easier to track and monitor the performance.
Although stock investing has several benefits, investors must also be cautious while making their decisions. Understanding the stock market basics and doing their research before investing is advisable to mitigate risks and maximize returns.