What is a Share or Stock Market?




What is a share or stock market?


A share market is a place where a person can buy and sell numerous company’s shares available in an IPO (you will get to know about IPO in the next blog).
Buying of shares simply means that you are a part of that company "a shareholder" or "a partner". The percentage of the partnership with that particular company depends upon the number of shares you have bought. Eventually, you are the owner of that company under the percentage of shares you have purchased. That means if the company gains profit in the future than you'll receive a dividend against the shares you're holding -- 'dividend is like an interest you get on given loan' or if the company gains loss than you get nothing. But that's not where you should stop because there will be a next dividend time where your company will make a profit. The market is full of ups and downs.



What is a dividend?


'A dividend is a payment made by a company to their respective shareholders. That means all the shareholders get a payment against their shares they are holding in a particular company.'
The dividend is calculated on the basis of the shares in a percentage a person is holding of a company.




Requirements to start investing in the share market?


1) A bank account from where you will use your money to invest in the share market.
2) A Demat or dematerialised account where your shares will be held in electronic form (you will learn more about Demat account like what it is and how to open it in the below article).
3) A couple of documents required to proceed further.

So, basically, you need only two accounts and some documents to start your investment in share market.



What is a Demat account?

A Demat account or dematerialised account is an account where all of your purchased share and securities are held in an electronic form. Just like a bank account where your money is held in an electronic form.
You can open your Demat account through your primary bank or by a share broker.

As personally speaking please refer to a broker because individually it's next to impossible to open a Demat account and take care of it and to perform in share market on your own.



Documents required to open a Demat account?
  1.   PAN card.
  2. Aadhaar card.
  3. Cancelled cheque / Bank Passbook.
  4. Passport size photo.

(As per Indian government rule)
(About your consecutive country please enquire your broker).



How to start investing in a Share Market?


As you have read about the requirements to start investing in share market now you can purchase and sell a share.
To start investing in share market there are some basic key points you need to know about share market.


1) Know before Investing:

Before buying a particular company's share you should know about that company and its performance in the market for the last three years for that you need to read and research about that company to avoid loss.
It will teach you that when you should buy that company's share to stay in profit.


2) Set and aim for long term hold:

Whether it is a share market investment or any other investment like real estate it's better to aim for the long term because long term investment gives you better result and profit.


3) Understand your own risk tolerance:

Here risk tolerance means that everyone has their own risk bearing boundary so it doesn't affect their financial status whether the market is in profit or loss. So invest in a market on which you can bear the risk or else you'll be under debt which nobody wants to be in, neither do you.


4) Do your research by your own:

There are some people who are not so interested in researching anything but things are different in the share market. Research is the only way that will keep you safe and away from loss. For research about a particular company you need to read articles about that company, their performance in the market for three years, there debts, there product's demand and their supply. These things will tell you whether to invest in that company or not.


5) Diversify your Investment:

There is a saying, 'you should never keep all of your eggs in one basket, or else you'll lose all at once.'
This rule is very crucial in the share market. You should never invest all of your money in one company instead you should invest according to the category under your portfolio due to this your investment risk will get diversify. A category such as an automobile company, a technological company, pharmaceutical company etc.


Conclusion

So before investing in share the market you need to get a share broker, prepare documents, do your own research, know basics about share market and last but not the least -- trade for long the term as I am also trading.

If you aren't thinking about owning a stock for 10 years, don't even think about owning it for 10 minutes. – Warren E Buffet.


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