Don’t you want to earn the hefty sum of money just by using your skills and basic knowledge?If you want to earn easy return then this is probably the best field you would like to break in.
Share investment is changing people’s life and it can help you to grow your capital to a higher level. It has changed fortunes of millions of people around the globe. Stock investment does not require you to have expertise on investing and share trading. It is not a place where people of higher IQ can beat the market and have lucrative deal .you can beat the market by just following your area of expertise. In the year 1970, Sir Issac Newton invested in South Sea company and came up earning the huge return. But in the later course of investment, he ended up losing more than around 3 million dollars. This great scientist was not been able to be successful because his decision was manipulated by crowds and brokers. you should trust yourself and don’t let the market override you. You should bear emotional discipline rather than working your brain. In contrast to sir Issac Newton, a normal working farmer ended up being a millionaire. This occurred because of the vision of the farmer he had and emotional discipline to persevere.
Where should you invest?
You must have heard in newspapers businesses losing or making profits. Or must have heard people becoming the millionaire by buying stocks.
Share market is a place where securities are bought and sold between buyers and sellers through intermediaries or brokers.
Shares,debentures ,bonds etc are the major securities being traded in the stock exchange. The stock exchange is also known as the secondary market because it deals with trading of existing second-hand shares. The primary market includes IPO that is it deals with shares which are trading first time in the capital market.
Stock exchange makes the capital moving by the purchase and sale of securities and similarly contributes to the progress of the country. The stock exchange is like a mirror in which we can see the reflection of the economic, social, political and industrial position of the country. It’s also known as share market,secondary market,security market,speculation market etc.
How can you start investing?
Once you have opened your Demat account you are all set to go.
Basic Terminologies You Should Know
It’s a situation where the market is the optimist and likely to increase in the near future. During bull market price of shares rises in a very high speed. It’s a time period where stocks rally to a very high level. Bull also refers to the investors who is the optimist in the rising price of stocks. For example, if an investor bought a share at 30$ and he is certain that the stock will rise to 50$.
It’s in contrast to the bull market. It’s a situation where there is pessimism in the market and the stock price is likely to fall. During bear market price of the stock falls with a very high speed. It’s a time period where stocks hit the rock bottom. It also refers to investors who is a pessimist about the stocks in the near future. For example, the investors think that he will not because the price of the stock may fall from $30 to $20.
It refers to the investors who buys stocks when there is the fresh issue of shares. The investors earn by the rise in share price or by premium money received by the stocks.
A share is the smallest unit of a company. Buying a particular share makes you the owner of that particular share.
Dividends are undistributed profits which the companies usually pay to the shareholders on annually or quarterly basis. It is usually distributed by large companies which have stable growth. The company can pay the dividends or retain back the earnings.
When selling a share the investors would like to earn more profit and will ask for the minimum price. This is the asking price at which the investor will sell at its minimum. Below this price the investor will not be ready to sell the stocks.
While buying a share the investor wold like to pay less. This is at bid price at which the investor will buy at its maximum.
Brokers or Intermediaries
These are middlemen through which the selling and buying of stocks take place.
Brokers earn commission while trading a particular transaction.
These are large caps companies which are extremely large and has enough goodwill in the market. These companies have stable growth rate and are less likely to get affected by market downfalls. These companies pay dividends to their shareholder’s example Apple Inc, Microsoft, Google etc.
These are com companies whose market valuation is more than $100 billion. These are very large companies and significant weight age in the index. These companies have steady growth rate and don’t survive easily in the worst case scenario. Apple Inc, Microsoft, Google etc.
These are large companies whose market valuation is more than $10 billion. These are large companies. It is similar to mega cap but smaller in market valuation. Foreign institutional investors, domestic institutional investors have the significant amount in their portfolio as it is safe and secure.
These are companies whose market valuation is between $2 billion dollar -$10 billion dollar. These companies have huge growth opportunities and can turn itself to large cap. Usually, their PE ratio is very high. These are where most investors want to put their money.
These are companies which have market valuation less than $2 billion. These are companies which have a huge potential to grow. Selecting right small caps can turn multi-bagger investment. These companies are less safe and can blow up. These companies require the huge investment.
Price equity ratio
Price equity ratio=current market price/earning per share.
It denotes the time period it will take to reach the current market price.
Generally, higher PE ratio represents higher growth rate and lower PE ratio represents low growth rate. One of the most important tools used by investors to calculate valuation. Higher PE companies have relatively low debt and higher returns.
Price book ratio=current market price /book value. It’s used to find valued and undervalued stocks. Higher book value represents overvalued stocks and lower book value represents undervalued stocks.
It is groups of companies placed under one business section. Or companies which have the same type of business they are dealing with. There are various market sectors such as IT, pharma, FMCG,banking ,powers and engineering etc.
Why should you invest?
When you think of investing there are many thoughts winding up in your brain about the risk,loss and bankruptcy.
In today’s situation, it is very important to take a risk,greater your risk greater will be the reward.This is the same in the case of investing. You should start investing at an earlier stage of life as soon as possible. Because time is one of the most crucial element for making money.
It is very common to make mistakes in your earlier phase. But gradually you will start learning from your experience you will easily beat the market. Experience plays a very vital role. There are many benefits of investing which affect you in the long run.
Investing in stock market creates enough return,buying stock of good Companies and holding it for around 10 to 12 years will return your decent sum of money. Every 9 years the stock market doubles itself. If you will buy the better share you can very easily do better than the market average. This will provide you with the hefty sum of my Money.
When you buy a stock you buy ownership of that amount of stocks. You have legal control over your shares. If you like or inspired by companies you can be a part of that company by buying its shares. You will have rights in board meetings annually or quarterly.
Investing is a very large field. There are shares of thousands of companies trading each day of various section sectors and various types. It is suitable for everyone. You can easily buy the share of your own choice by applying your basic knowledge and skills. It is also suitable for low-income class people as they can buy penny stocks. Investing does not require the huge sum of money.
Investing in stock market teaches you lot about the practicality of what’s happening around. While investing you learn various things. It enhances your mental skills and general awareness.
Better return than saving deposits
Investing provides a better return than bank deposits. Bank renders very low-interest rate. It does not have high credit return. While stock investing can prove to be a multi-bagger investment. Stocks have huge potential with themselves. Stocks have always beaten everything when compared to the return.
Buying stocks offer you limited liability. Investors can lose money only to the extent they buy their shares. They are not allowed to pay for the loss of the company from their own pocket.
You can earn easy money in investing once you have found good stock. You can buy or sell it anytime and from anywhere depending on your suitability. You don’t have to work hard enough to look after your investment. Reinvesting the profit will yield the greater return.
Stocks are highly liquid that is you can easily convert it into cash anytime. You can easily take advantage of market conditions by changing your stocks into cash.
Investing can help you get stable future. You should start investing as soon as possible , this will really pay off in long-term. You can easily multiply your money by waiting years. This will make you great profit at the end. This will secure your future and provide better than your pension.
Buying shares provide you good dividend yield according to the companies you are buying in. You get your dividends annually or quarterly. Sometimes dividend payoff is very high. Having large numbers of shares will yield good dividend.
Investing always provides plenty of opportunities. You can use the market conditions as the opportunity for yourself. Bear market provides ample offers to buy good shares at low cost. You should wait for the market to decline and use your opportunity. Similarly, you can sell the stocks when it has reached a high level.
This will end up a very lucrative business.
Investing builds up your risk bearing and applying your talent. It helps you invest in yourself by applying various information. It creates entrepreneurship development. It’s similar to open any business. Good entries are good decision makers,they are self-learners and leaders. Investing help makes you create good entrepreneurs.