Shares primarily are units of equity ownership in a corporation and exist as a financial asset that provides an equal distribution of any residual profits. Or in simple terms, you can say shares represent ownership an individual holds in the company.
How do shares work?
The overall aim of a company to sell their shares is to increase capital for their business. They do so by issuing shares through an initial public offering in the primary market. The shares are then traded in the secondary market and if an investor decides to buy a share, they can do so from another investor.
How competitive is the share market?
The answer to this simple question is “very”, you’d find numerous buyers and sellers in the share market trading shares, determining the price of the shares. Investing in shares is completely volatile as the market is unerringly fluctuating at times.
For instance, the m&m share price today ranges from Rs. 1246.3 which might flip the very next minute. The uncertainty and competitiveness of shares in the share market is what attracts the investors and thus highlight the importance of investing in shares.
Want to know what benefits you can avail from investing in shares? Read below.
If you wish to make your investment portfolio more valuable, shares are the right choice for you. Defining benefits of investing in shares in one line would be, that shares can be considered as one of the best ways to increase your long-term wealth.
Make greater returns in a short span of time
Unlike other investment units like bonds and fixed deposits, investing in shares pays you right. A share investor can avail an excellent chance of making higher returns in a comparatively shorter period.
Diversification of investment portfolios
Investors who engage in shares are at flexibility in benefiting from the share market and diversifying their investment portfolio. This also eliminates risks inherent to share investing and offer the investors with a wide choice of shares to invest their money in.
Increased liquidity
Shares are primarily very liquid products and are convenient to be bought and sold over any exchange platform. This thus ensures the investor to trade easily and also allow them to sell part of their shares other than redeeming the whole lot.
Growth of capital
You can achieve capital growth by selling a share for more than you paid for it, this phenomenon is also known as capital gain, which occurs when there is a significant rise in share prices and is indeed the long-term goal of investing in shares.
Right to vote and ownership
Once you acquire a share in a company, you own a portion of ownership in the company. This, in tun, helps investors achieve the right to vote and offer a contribution to the operation of the business.
Regulated framework
The SEBI holding responsible for regulating stock exchanges, provide transparency of share framework within a country and ensure a well-protected regulatory framework for the investors. Therefore, this significantly reduces risks due to fraudulent companies and assures investors of trading securely.
Investing in shares doesn’t need much knowledge. Investing time in researching the company’s portfolio such as 5paisa will ensure you to trade and invest efficiently.
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