Making money through equity investments
What is equity investment?
Every company requires cash to meet its present funding needs or development plans. An equity investment is an investment by persons or firms. The investment is generally in the form of stocks, wherein earnings are in the form of assets gains or bonuses. The investor ponders equity investments as the final method of making the best use of his capital. The investor recuperates his money only once he vends his stocks to others.
Equity investment can also be a fund for obtaining possession in a private business or as undertaking capital in fresh companies. The investor advances his revenue only once the company agrees to allocate the profits after liquidating the assets or while they sell their shareholdings to new investors. In the latter, the firm has to come across its responsibilities as the main concern.
How the stock market works!
An individual can buy and or sell any stocks of any company either through an online trading account or through their broker. As soon as you place the order, it's redirected to the related stock exchange, and the order is executed. Once the transaction is done, if it's a ‘buy,' then the stocks acquired are delivered to your demat account where they are kept in electronic form. If it's a ‘sell,' the stocks are taken out of your demat account and money is credited to your account.
Process of investing in equity markets
There are two basic methods that stock exchanges use to execute an equity trading:
• Exchange floor
• Electronic trading
1. Exchange floor
Transaction on the floor of the popular stock exchange is a picture most of us have seen and cheered to on television. When the market is open, we see hundreds of people whoosh about shouting and screaming to one another, speaking on phones, staring at computer screens, and entering into deals with each other.
2. Electronic trading
In this fast-moving world, the electronic market utilizes huge computer systems to match sellers with buyers and vice versa instead of human brokers. Many traders now favor this technique of equity trading.
Key benefits of equity investment
Below are the key reasons to invest in equity markets:
• Wealth gains over the long-term
• A decent source of revenue
• Extremely liquid
• Tax rewards
• Corporate control
• Limited liability
If you're interested in the stock market, it's recommended to trail market dealings and all related business news. This will aid you to comprehend if your broker is correct for you & whether your investments are meeting your goals.
About the Author
Start Investing Now!
Open Free Demat Account in 5 mins