Basics of Stock Market - Beginner

Why should one invest?

It is essential to invest in order to achieve one's financial goals, and avoid any unexpected expenses. It's the act of putting aside income that has been earned by an individual or group to generate additional income.

It is always recommended to categorize your investments according to time-period (short, medium, or long). It is important to invest early, often, and for a longer time.

What are the different investment options?

There are two main categories that can be used to group investment options:

  • 1. Physical assets include real estate, gold, jewellery, commodities, etc.
  • 2. 2. Financial assets such as bank deposits, post office savings, insurance, PPF and EPF.

There are many ways to access physical assets. You can have them in the traditional way, via futures contracts, Dmat forms, ETFs, etc. Financial assets can be held at financial institutions like banks, insurance companies, post-offices or given market exposure for investing in equity, derivatives, currency, commodity, and bond markets. Investors of all types will find the right product for them, despite each mode of holding having its advantages and disadvantages.

Physical holding:

This type of holding is liquid and can be bought at a good price in a downtrend.

Futures contracts:

This type of holding has many of the same benefits as physical holdings, including leverage. Futures contracts also offer liquidity and ease of entry and exit from the market.

Optional Contracts

While options may seem preferable, they are less risky and more likely to be able to access the market. However, they can also be more complicated and require more research to understand volatility and other strike moves. Options offer similar leverage benefits to future contracts, and allow users to better understand their risks.

Exchange Traded Funds

ETFs can be accessed through an equity trading account. They are almost identical to stocks. ETFs are paper transactions that cannot be converted to physical.

Why stock brokerage firm?

For successful returns, it is important to get support when managing investments. A stock broker is a firm that helps investors manage their investments. A stock broker can provide many benefits to investors.

A stock brokerage firm can provide expert advice based on professional research reports on how to invest and grow your investments.

Stock broking firms offer record keeping as one of their benefits. Stock broking firms keep records of trade confirmations, statements and year-end tax reporting statements. They also record deposits, withdrawals, and other activities.

You can get professional and personalized services by becoming a member of reputed broking houses.

Broking firms offer other investment options, in addition to equities. These include mutual funds, bonds, options, etc.


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