Being financially independent is a life goal for most. You find ways wherein you can combat inflation and the soaring prices of products and services. But keeping pace with inflation is challenging. So, your investments must deliver good returns. Equities and other shares in the Share Market today have been the best performing asset over the long term.
If you invest prudently, you can minimize your risk and maximize returns after doing enough research.
What is Share Market exactly?
It is where shares of publicly listed companies are traded for a price that may keep fluctuating daily. The objective is to purchase these stocks when their prices fall, sell them when they rise, and book a profit. This profit could happen in a few days, months, or even years, depending on how long you wish to stay invested and the stock’s performance. Let us understand with an example:
Suppose you purchase 300 units of a stock priced at Rs. 20. You have invested Rs. 6,000 in a particular stock. Now, say the stock price rises to Rs. 35 in a few days. Then, you could sell your shares for a profit of Rs. 4,500. If the stock price falls, you may want to hold off selling the shares until it rises and becomes profitable.
Two major stock exchanges include National Stock Exchange and the Bombay Stock Exchange. A chunk of share trading occurs through them as Sensex and Nifty today.
Types
There are two Share Markets in India:
Primary market: Every company that wants to trade in the Share Market should enter through the Primary Market. Privately held companies can raise funds and start trading publicly after launching an Initial Public Offering.
Secondary market: This is where investors purchase and sell securities they already own. Transactions here are typically conducted through brokers.
Reasons to invest
Here are reasons to invest in the Share Market today:
- It earns returns that beat the inflation
- Investing in the right stocks lets you reach your financial goals
- Investing in the right stocks provides good returns
- You can earn additional income
- There is no specific lock-in period
- You can earn from bonus shares and dividends
- Invest with minimal funds
While there are many reasons, note that it is essential to be aware of the stocks you consider for investing. Do appropriate research before investing in the Share Market. Remember that a series of prudent investments can build wealth.
