Investing is all about making your money work for you by putting it into different assets over time. A common choice for many is stocks. When you buy stocks, you become a part-owner of the company, which means you can share in its profits and growth. But keep in mind, the stock market can be pretty unpredictable. Getting a grip on the basics of the stock market can really help you make smart choices and possibly see some good returns on your investment. In this article, we’ll dive deep into the share market.
What Is a Stock?
A stock is basically a slice of a company that you can purchase. When you buy a stock, you become a shareholder, meaning you own a small part of that company.
As a shareholder, there are two main ways to earn money: if the company’s value increases, your stock can become more valuable, and you could sell it for a profit. Additionally, some companies distribute a share of their profits to shareholders in the form of dividends. You can trade stocks on the stock market, where their prices fluctuate depending on the company's performance.
What Is the Share Market?
The stock market, often referred to as the share market, is where people buy and sell shares of publicly listed companies. It's overseen by the Securities and Exchange Board of India (SEBI), which makes sure that stock exchanges operate smoothly and that companies follow the rules and share necessary information.
For example, if a company has 1000 shares available and you own 10 of them, you hold a 1% ownership in that company. Essentially, the share market is the place to trade shares from various companies.
How Does the Stock Market Work?
The stock market is like a big marketplace where people buy and sell stocks. When a company wants to grow, it can sell stocks to raise money. Investors who buy these stocks become shareholders, which means they own a small piece of the company. If the company does well and makes a profit, the stock price might increase. People can then sell their stocks at a higher price and make money. On the other hand, if
the company doesn’t do well, the stock price might go down, and people could lose money.
For example, imagine you buy 100 shares of a company at ?5 each. If the company does great and the stock price goes up to ?10, you could sell your shares for ?1000, making a profit of ?500. However, due to some external or internal factors, if the stock price drops to ?3, your shares would only be worth ?30, and you would lose money if you sell them.