What is Share Market? How to invest?
In today’s time, during the rush of life, the biggest need is money, and the more it is earned, the less it is. If you are also thinking of investing in the share market, then it is very important for you to have complete knowledge about the share market.
This post of ours can provide you all the important information related to share market in detail. And after knowing all the information, it will be easy for you to invest in the share market. So let’s first know what is share market?
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What is Share Market or Stock Market?
The stock market is the most important place for companies to raise funds, where they are also provided loans and get financial assistance. That is, it is a place where shares are bought and sold, which makes it easy for companies to get financial assistance for expanding their business. Apart from this, it is also a very good place for some people who are craving to earn more money with less investment.
If you invest in the share market at a young age and stay in the share market for a long time, you can get the amount invested in the form of a much higher amount as per the prescribed rate. Purchased shares come in handy in situations when you are in dire need of money, so you can plan your investment strategy based on that.
By buying shares, you invest money in the company, as the growth of the company increases, so does the price of your invested share. Conversely, as the company faces a loss, then the price of your share also falls. There are many factors that affect the price of a share. But to make good profits in the share market it is very necessary to stay for a long time.
Share Market Types
Share markets are classified into two parts.
Primary Market :-
A company or government issues shares through the primary market through the process of an IPO, in exchange for which money is raised. In the stock market, if 200 shares are allotted to the shareholders, then it is considered as distribution of shares on public basis and if less than 200 shares are allotted to the holders then it comes under private system.
In this market, a single company is registered to issue shares of a fixed amount and raise funds in return. This process is also called listing on the stock exchange.
Secondary Market :-
After buying and selling of shares in the primary market, they are brought to the secondary market. Where the share holders get an opportunity to exit the investment by further selling their purchased shares or to collect money in exchange for the share. These markets provide the nature for shareholders to sell shares in the current market at a price agreed upon by the buyer.
Usually a share holder takes recourse to intermediaries to sell his shares at a fair price. Those intermediaries make the whole process simple and convenient. There are many types of intermediaries present in the market who present different types of plans to the investors.
When to Buy Shares in Share Market ?
There is a fixed time to buy shares in this financial market, but now it is very difficult to understand that at which time you should buy shares and when not, you can understand it completely . The way you do your research before buying any item in the market, in the same way you have to do a complete investigation before buying shares in the stock market. You can get complete information about the movement of stocks in the investment market through newspapers and telecasts on TV.
Only after knowing the complete information about the decrease or increase in the rate of share in the share market, you should think about investing in the share market. Sometimes some people do fraud in the stock market and run away with the amount to be invested. In such a situation, you need a lot of care and thorough investigation to reach any decision.
How to Invest in Share Market ?
Although the process of investing in the share market is very simple, but if you already have an ordinary deposit account and you want to invest in share market, then it is necessary for you to have a trading or demat account. This type of account makes the transaction of your shares easy and convenient.
This account is linked to your savings account itself. Before knowing about what are these accounts and what is the difference between them, you should know how you can invest in share market. It is very important to know the following steps about the whole process of investment.
Get Pan Card or Aadhar Card :-
To complete any work in the Indian market, first of all you must have a PAN card or Aadhar card. You need to do KYC of your account at the time of opening and joining the market regulator Securities and Exchange Board of India for investment.
Apart from this, according to the rules set by the government to open a demat account, you are required to submit a canceled check attached to the account along with all the documents as well as 6 months bank statement of your account.
Contact Broker :-
If you do not have complete knowledge of the share market, then do not go directly to the share market to buy shares. If you will complete the process for investment through a broker, then you will be able to understand all the strategies of the share market easily.
Intermediary or Broker is a company or agency registered or authorized by SEBI to conduct investment business in the stock exchange which fully assists the persons investing in the share market. They charge a brokerage fee or brokerage charge in return for your assistance.
Open Demat Account :-
After you have understood the whole process of the share market, then you will have to open a demat account, which will contain all the detailed information about all your shares bought and sold.
Buying and selling of shares :-
The broker gives you complete information about the buying and selling of shares in share market. But for that also you must know the right time and method of investment. Let’s know the right ways to invest in share market –
- Before investing money in share market, it is better to understand all the market conditions thoroughly.
- Set your goals and make strategies accordingly. Find out about the shares that are being sold and bought for investment purposes.
- Learn to judge the right time while you are in the market. Try to buy the shares at the lowest price and don’t sell them unless you need them a lot.
- To avoid incurring losses in trading, always keep in touch with the broker and also keep cross-checking his work.
- Always keep an eye on your portfolio and instead of sticking to one spot, be sure to find the best and possible opportunity for your stock so that you are also risk averse.
Why is the Share Market Important?
Capital is important for the expansion and growth of any company, for which the company takes the help of the share market. In share market, shares are issued by many companies to the shareholders and the general public through IPO and in exchange for those shares, funds are received by the company, which they use for the growth of their company and for fulfilling the various objectives associated with their company.
After this whole process, the names of each company that issued the shares are included in the list of the stock exchange of the IPO, through which any company or any person can easily become an investor of the company, during this process it helps in maintaining the firmness of the company. Investors and traders in the share market are able to choose the product according to their needs.
It is such a simple platform where any common person or businessman can easily become a shareholder and invest any amount he wants to fulfill his life goals. You can also sell and buy them at any time according to your needs and the market liquidity.
Dividend can also be earned easily in this market, the following are 3 ways. Let us know about them in detail –
Dividend is the amount that is earned by a company and this earned money is distributed in the form of cash among all the shareholders associated with the company.
Capital Augmentation :-
In today’s time, there is a competition to earn more money from less resources, due to which if a good place is to be found, then the best place is share market. Where your hard-earned capital can be increased and decreased in a large amount in a short time.
The best means for today’s youth to earn money in a short period of time is to invest in equities as a fixed amount. Where easily you can get good growth on your invested capital. If you are a trader then you can get a decent income from your investment and invest your dividends in multiple tranches of money in the form of bonds and equities.
Buying back shares :-
Sometimes due to certain circumstances companies need to buy back their allotted shares from the shareholders. In such a time, the shareholders get a fair value.
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Share Market’s Some Important Points
Before investing in share market, it becomes very important for you to know some important rules and important things related to the share market:-
Learn then move on :-
To do any work well, first of all it is very important to learn it well, otherwise we fail in that work. Before entering the share market, it is very important for you to know all the rules and regulations of the stock market.
Do a complete search :-
It is often seen that you will shy away from searching about anything. But it is not right to take any kind of risk in case of investment as it is your hard earned amount which you are going to use to buy shares in investment market.
Make a plan after researching:-
After collecting all the data completely, it is better for you to plan in advance for how you want to work next. Because you will never fail if you follow the plan.
Get all basic information :-
To become a good investor, it is very important that you should know all the basic information related to share market in detail.
Understand the risks:
There are some people in share market about whom you can face losses if you do not have complete knowledge, so before investing in share market, you should know in detail about all the risks associated there. Fearing those risks, you should never make a hasty decision.