What is a Share ?
Ans :In finance a share is a unit of account for various financial
instruments including stocks, mutual funds, limited partnerships, and
REIT's. In British English, the usage of the word share alone to refer solely
to stocks is so common that it almost replaces the word stock itself.
In simple Words, a share or stock is a document issued by a company,
which entitles its holder to be one of the owners of the company. A share
is issued by a company or can be purchased from the stock market.
By owning a share you can earn a portion and selling shares you get
capital gain. So, your return is the dividend plus the capital gain.
However, you also run a risk of making a capital loss if you have sold
the share at a price below your buying price.
A company's stock price reflects what investors think about the stock,
not necessarily what the company is "worth." For example, companies
that are growing quickly often trade at a higher price than the company
might currently be "worth." Stock prices are also affected by all forms of
company and market news. Publicly traded companies are required to
report quarterly on their financial status and earnings. Market forces and
general investor opinions can also affect share price.
Quick Facts on Stocks and Shares :
Owning a stock or a share means you are a partial owner of the
company, and you get voting rights in certain company issues
Over the long run, stocks have historically averaged about 10%
annual returns However, stocks offer no
guarantee of any returns and can lose value, even in the long run
Investments in stocks can generate returns through dividends,
even if the price
How does one trade in shares ?
Every transaction in the stock exchange is carried out through
licensed members called brokers.
To trade in shares, you have to approach a broker However, since
most stock exchange brokers deal in very high volumes, they
generally do not entertain small investors. These brokers have a
network of sub-brokers who provide them with orders.
Investing in shares can make you
If there’s something big that you want
– from a comfortable retirement to a
house on the beach – and you can’t
afford it today, you need to save and
make your money work for you.
When you have lots of time, but not
lots of money in a lump sum, the best
way to build wealth is by investing in
How To Invest In Share Market ?
Share Market is a place where everyone take bath in order to taste the money. But it purely depends on the fundamentals, luck,
global cues, behavior of other country markets, currency rate, Forex rates, currency trading etc. Trading is done in terms of the
shares. These shares are the name of the companies which gets listed, generally. Also the share price varies time to time even
second by second, if the variation graph is critical.
Types Of Sectors
There are various sectors in the share market. Some of the known sectors are Oil, Reality meaning RealEstate, Construction,
Finance, Telecommunication, Refineries, Steel, Broking firms, Food and beverages, Metals, Jewelery, Packing, Consumer Goods
etc. The best sector to invest is the decision taken by the investors understanding the fundamentals of the company, turnover,
volumes traded, balance sheet and so on.
Terms Of Investment
Basically investors should go for two types of investments, short term and long term.
Short term investments are one that an investor will buy stocks and keep in his portfolio for at least 3-6 months. Gain must me kept
in mind and thus the selection of stocks plays vital role here. Equity advisor consultancy is recommended.
Long term investments are one that an investor will buy stocks and keep in his portfolio for more than 6 months and for years. Here
portfolio management is very important as many tax free income flashes the eye like Dividend, investment duration etc.
Share Trading Houses
Generally shares are traded electronically today and these process is done through the brokerage houses and from exchanges like
Bombay Stock Exchange BSE and National Stock Exchange NSE.
Some of the well known brokerage houses are ICIC Direct, Reliance money, Sharekhan, HDFC Securities, India Infoline, Mangal
Share Tips, trading tips are provided by these houses to their customers regularly.
Why Share Prices Go Up
Because companies tend to grow and prosper over
time–and because a share of stock allows you to
participate in the prosperity–stock prices, in the
aggregate, tend to appreciate over long periods of
time. However, individually, some companies
prosper; others fail. If you buy a share in a loser, you
could lose all, or a significant portion, of your initial
investment. In other words, when you invest in
stocks, you risk losing your initial investment, but
because you are taking a bigger risk, you get the
opportunity to earn far bigger rewards.
Identify the Best Sector
As we saw above there are lot of sectors available in front of the investors. But which sector one should
choose that will give good returns in short term and long term investments. If the economy is weak and the
world is facing a financial pressure or crisis then it is tough to identify the sector as every sector would get
So it is better to pick up the mid cap stocks that will not go worse in near future. Because large cap stocks
will plunge and surge drastically like anything. If you were caught at the peak say January 2009. then it is
tough to get to that level.
How To Invest ?
This is the first question a person asks himself and approaches others when he wants to invest in
sharemarket. Basically you should have a clear vision when you want to reap the benefits that is the
If you want to pullout the invested money in short term, you should choose the critical moving sectors
and shares and also don't act blindly on the third party suggestions. If you want to have the investment
to be taken by your generation, then you can go for Long Term investment.
In long term investment one should analyze the pure fundamentals of the company, the dividend
amount it pays to the share holders,the capital and the percentage of share ratio between the company
and the public.
How to Deal With Price Yo-Yos :
These heady climbs and sickening slumps are called volatility. When an
investment is as volatile as the stock market, it is unwise to invest unless
you have a fairly long time horizon that allows you to wait out the price
swings and go for the long-term price appreciation.
How long is a “fairly long” time horizon? That depends on you and why
you are investing. Let’s say you want to buy a house in five years, and
you’re trying to determine where to invest the down-payment money.
The stock market would be a good place for all or part of that money if
you wouldn’t be crushed if your home-buying plans had to be put off
because of a market slump that depressed the value of your investment
portfolio and thus reduced the amount you had saved for the down
payment. What if you would be crushed if you couldn’t buy the home as
planned? Then put the down payment money in bonds that mature (or
pay back their principal) at the same time as your plans do.
Stocks are also ideal to have in your retirement portfolio. The younger
and farther from retirement you are, the more stocks you can handle.
And they’re a good choice for college funds for young children.
However, if you are investing in individual stocks rather than mutual
funds, you must diversify your portfolio by buying stocks in several
different companies that do business in several different industries. That
ensures that your net worth won’t crash if one industry, whether it’s oil,
technology, or retailing, hits a slump. Experts suggest you own shares in
at least eight to ten different companies. Ideally, those companies
should be operating in substantially different industries.