If you are thinking about investment and
looking forward to start investing in the stock market - you need to have a
basic idea of the process in which stocks is traded at the stock market. No
other investment available holds as much as potential as stocks over the long
run. Not real estate. Not bonds. Not saving accounts. Stocks are not the only
things that belong to your investment portfolio, but they may be the most
important, whether they are purchased individually or through stock mutual
funds. Now Question arise what is stock or share?
What is a
Share?
Share means having portion of something with another. The operation
carried out by companies making the first sale of shares to the public is
referred to as Initial Public offering or IPO. The main purpose of such an
operation is for companies to raise funds for the purpose of expanding their
business. They accomplish this by selling shares of stocks to the public. In
other words, it is the process of bringing a stock issue to the market for the
first time. Thus, buying these shares you can become an owner of a portion of
the company you have invested in.
Shares are bought and sold in a market
place referred to as Stock Exchange Market. Here is where all transactions take
place.
How to start Investment in share market?
For start investment
in share market, we need to contact depository or brokerages firm. These
brokerages firm are the only ones authorized by the government to carry out
transactions on your behalf, of course , following your indications. These
transactions can be performed either through the phone or via the
Internet.
These brokerage firms work like a bank account, meaning that
opening an account with them is like having your money in a bank. You get an
account number and a password that only you know, with which, you can at any
time access your account, carry out your transactions, check your account
balances and check your investment development. For start investment in share
market, you must have 3 types of account:
Demat Account: A demat account
allows a person to hold the shares in dematerialized form i. e. electronic form.
Dematerialization is the process by which physical certificates of an investor
are converted to an equivalent number of securities in electronic form and
credited to the investor’s account with his Depository Participant (DP). SEBI
has made it compulsory for trades in all listed scrips to be settled in demat
mode.
Trading Account: A trading account allows a person to place an
order in the stock exchange to buy or sell shares. Trading refers buying and
selling of goods. Trading A/c shows the result of buying and selling of goods.
This account is prepared to find out the difference between the Selling prices
and Cost price. If the selling price exceeds the cost price, it will bring Gross
Profit. For example , if the cost price of Rs. 50, 000 worth of goods are sold
for Rs. 60, 000 that will bring in Gross Profit of Rs. 10, 000. If the cost
price exceeds the selling price, the result will be Gross Loss. For example , if
the cost price Rs. 60, 000 worth of goods are sold for Rs. 50, 000 that will
result in Gross Loss of Rs. 10, 000. Thus the Gross Profit or Gross Loss is
indicated in Trading Account.
Bank Account: The bank account should be
linked to your trading account. The bank account is required to transfer or
receive money when you buy or sell shares through your trading
account.
After opening these three accounts, you can start investment in
Indian share market. You can take trading tips for getting profit from share
market.
Find the related info about Finance through the Online Finance.
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