If you were to open a book on economics and look up the word ˘investing÷, chances are that you would find the following definition: ˘Investing is building up to meet future consumption demands with the intention of making surpluses or profits, as they are
What is a share?
Share or Equity represents part of an ownership of a business. So as a shareholder you own a piece of the action that happens in that business. Why would you want a piece of the action? For the rewards of course. As a shareholder you have a right over
Why invest in shares?
We know now that investing in shares is akin to owning part of a business. A profitable business keeps ploughing back profits to earn more profits or should we say "compounding profits".
Hence unlike investing in assets like gold and real estat
What determines stock prices?
In the short run, the market is a voting machine--reflecting a voter-registration test that requires only money, not intelligence or emotional stability--but in the long run, the market is a weighing machine.
How much does a share cost?
The price is set by the market and it all depends on how many buyers and sellers think the share is worth that day. Some stocks sell for less than Rs10 a share, others for more than Rs1,000 a share. But do not be misled that a Rs10 share is better than a R
When am I ready to buy shares?
Before you decide to make your first share purchase, it helps to take stock of your net worth. Remember while investing in shares is lucrative in the long run, it is also risky.
Hence the money that you use to buy shares must necessarily be mon
Can I put all my surplus money in shares at the age of 40?
Investing in shares is risky but also lucrative over the long run. Hence it makes utmost sense to have the maximum exposure to shares when you are young and reduce your exposure as you age.
There is another factor that compels one to reduce his
How do I manage the risks associated with investing in shares?
Investing in stocks is risky since there are many uncertainties associated with the ability of a business to generate profits. Hence there is no control on the returns but an investor has control over managing her/his risks.
Can I invest in any share?
It is not how much you save but where you save it that holds the key to success. Similarly it is what share you buy rather than how much of it you buy that is more important.
After all, when you buy a share you buy a business. The returns you ma
I am ready to invest. Is there anything that I need to do before I buy my first share?
There are three rules to follow before you take your first dip in the investing waters:
- Make a plan
- Take into account your strengths and weaknesses
- Review the plan often and change it as your needs and circumstances change
How do I buy a share?
Unlike buying clothes from your favourite showroom where you just walk in, buy the stuff you like and pay for it, buying shares is a little different.
Shares are traded on stock exchanges and you can buy them only from people recognised/authority
How do I sell a share?
The same way you buy one, you just holler ˘sell÷ this time around. You call your broker and tell him or her to sell your shares (or you enter your sale with an online broker). You'll get the market price of the stock for that day.
What if the price of my stock goes down?
That can be an even better reason for not selling. The price of your stock is almost guaranteed to fall at some time. Maybe your company will go through a period when business isn't so great. Then there are times when the whole stock market goes down becau
What does "going short" on stocks mean?
If you buy a share with the expectation that the price will rise, you are "long" on the stock. On the other hand, if you expect the price of a stock that you do not own to go down you can even sell it. Then you would be going "short" on the stock. In case
What is the difference between "investing" and "speculating"?
Here is the doyen of investing, Benjamin Graham expounding on the distinction between these two activities.
An investment operation is one which, on thorough analysis, promises safety of principal and a satisfactory return. Operations not meet