The stock market works on a complex mechanism via which accumulated savings people get channelized into several forms of investments, such as shares, bonds, or debentures.
The stock market is mainly about pooling capital to give out funds for several reasons, such as constructing new projects. It also lets individuals put their funds into various ventures to reap huge returns. When you purchase stocks, you acquire a small portion of the company.
The share market is also commonly known as the equity market, where traders or investors purchase and sell stocks of public companies. A share market is a physical or virtual place where traders and investors come together to buy or sell their shares.
For beginners, BSE or Bombay Stock Exchange is more suitable for trading or investing, whereas NSE India or National Stock Exchange is more suitable for experienced traders and investors.
The share market lists companies available for trading or investing purposes and their current market prices. This lets us decide our views and opinions on how much is worth investing in the stock market.
The stock market is a source for companies to procure money and a medium for people to learn trading, invest in companies and businesses and ultimately make some money. The greater number of shares you have, the larger portion of the pie you get.
There are two ways to purchase shares:
Purchasing through a broker:
A broker acts as a middleman and facilitates trading stocks on your behalf. They can be anyone from someone who wishes to purchase or sell shares to anyone with offices located all across the country that operates from either their home or office.
Purchasing directly with the help of the stock exchange:
Here, you do not require a broker since you can facilitate your purchase directly from the exchange that charges you a nominal transaction fee, but the complete procedure is convenient and systematic.
Conducting a detailed assessment of the company you want to invest in is also important. Get an insight into how the stock price has performed recently, compare it with its other competitors, look at its balance sheet, and also refer to its current annual report. You can then practice trading online by checking websites and getting market-related updates, business news, and information.
It is crucial to answer certain questions which depend on your investment goals – are you planning to utilize it for retirement? Do you plan to utilize it as a short-term investment tool? What is your risk tolerance level? What is your time frame? If you require funds for a term of less than five years, you should not opt for volatile shares with great price fluctuations.
Whereas, if you want a long-term investment, it may be worth taking up a certain level of risk by selecting growing shares that have yet to become mature or stable. Also, you can opt for quality companies with a proven track record over time instead of jumping into large-cap stocks immediately.
Acquiring stocks can be completed either offline or online. The former option being the simplest, it is to be considered that virtual trading does not guarantee returns as such, and it is of utmost importance that you conduct research beforehand and consult investors or financial advisors before parting with your hard-earned money.