Elders at our home always advise for ‘Savings’ for the rainy day and such savings are very much helpful whenever a crisis hits. Investing in gold and stock market is few methods and practices to be followed to safeguard financial hindrance.
The classic example of how shares can be put to use is “The business magnet Dhirubhai Ambani’’, He floated IPO (initial public offer) of 2.8 million equity shares of Rs 10 each at par. At this stage, Dhirubhai Ambani was relatively unsure about the company. Later became a giant known as Reliance Industries.
Let us understand what is a stock?
A stock simply means a share in a company. The company’s stock is traded in stock exchange market when it is a listed company. These are the shares which one can buy with their money. Stock, shares, and equities all mean the same. And this is how a company always remains with sufficient cash flow.
Investing and Speculation
There are set of people who also believe that dealing in the stock market is more about ‘Losing money’ than ‘booking a profit’, as there are no guaranteed returns from the stock/share market. The stock market is used for ‘Speculation’ and ‘Investing’. Speculation is equivalent to gambling. People who speculate purchase something with the hope to sell it with a higher margin. Without understanding or researching about the company or thinking about why would the price rise? Investors are the people who hand over the money to the company for the betterment or to invest their money in the growth projects. This process is done with an expectation of expansion in the future compared to the investment done in the initial phase. The money invested is expected to increase in value in future.
- Lets further look into the Do’s and Don’ts for trading in shares
- Dealings are done only with registered market intermediaries like SEBI/Stock exchanges.
- Once the order is placed via the market intermediaries check the company’s authenticity, its website, its management, business magazines etc.
- Read and understand the risk disclosure document carefully.
- Do your homework of researching the stocks which show sudden rise especially with low price stocks.
- Never get into dealing based on rumors, tips received from unknown sources.
- Never deal with unregistered brokers, unregistered intermediaries or sub-brokers.
- Do not imitate the investment decisions of others, research and decide.
- Never trust the repayment guarantee via post dated cheques by the company.
We are sure these basics would be great to kick-start your share market trading.