Beginners guide to Share market Series : chapter 1

Beginners guide to Share market Series: chapter 1

 

Introduction

What is a share?

In general, a share is a part of ownership divided among several people.

when it comes to share of a company the total worth of the company is divided into parts and distributed among its partners, mostly the majority shareholders have the decision-making rights.

Example if a company is worth ₹1,00,000 and there are 4 shareholders

 

Let us consider The shareholders as A B C D

 

consider A has 60% of the shares = ₹60,000

B has 10% of the shares                    = ₹10,000

C has 5% of the shares                       = ₹5000

D has 25% of the shares                    = ₹25,000

 

here A has majority shares so he will be the decision making partner

 

 

Share percentage




 

What is share market?

Share market is a place where shares are bought and sold, now in the digital age everything is done through computer end servers Eliminating the need to visit the market physically or through agents who served under broker's as it was done until 1990`s

 

how to buy and sell shares?

Before the digital age people used to get physical share certificates 40 number of shares purchased of a particular company, but now you get everything digitally you can purchase a share within seconds and sell it at the same speed

For this you need a demat account where all your shares are stored in digital format, and you need a trading account to buy and sell shares which are provided by many stockbrokers

 

All the stockbrokers have the same functionality to purchase a share just search for a share and select it click on it you will get the option to buy or sell select the number of shares you want to buy and enter the price at which you want to buy or sell confirm the order and it will be executed according to the running price of the share if it reaches the price which you have entered. Some brokers may have slightly different functionality but everything else still is the same

 

 

How much money is needed to start trading in share market?

Start trading in the share market with as low as ₹1 but some brokers insist you to invest at least 10,000 because if you invest ₹10,000 you can see the growth of your investment in a nominal way and you can diversify your investment so that you can purchase a decent amount of shares of different companies and get good returns

For trading in futures and options like nifty and bank nifty the amount needed varies according to the lot size of the share

 

What is the starting price of a share?

There are some shares priced as low as 10 paisa and may go up to ₹1,00,000 but you need to be very careful investing in in the lowest priced shares, as those companies might close anytime soon.

 

How long can I hold a share?

You can essentially hold the share of a company as long as the company is running even though some companies delist the shares from share market you can hold on to their shares till the companies up and running but you can't sell them digitally as it would not be available in the market you need to find the buyer or you can contact your broker and sell them physically to any interested buyer or to the company itself.

 

What are the ways to earn money from share market?

There are 3 major ways to earn money in share market

  • Investing
  • Trading
  • Speculating

 

Investing

Investing is the process in which you buy a share of company and hold on to it for a period of time so that you expect a company to grow in that particular period of time Sometimes you get a dividend yes a part of profit earned by the company also you can what's the share price rise and sell it for a profit

 

Trading

Trading is the process in which you buy a share and select at a profit as soon as it reaches the desired amount Mostly trading is done through margin money where you pay a part off the total amount required to purchase share and the rest of the amount is given to you as credit  you have to sell the share and return back the credit amount within a speculated time.

 

Speculating

 Speculation is this process Where people predict the movement of the price make profit, usually it is done in options trading.


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