This article is focused on answering the question, what is share market. Hence, to understand the share market, we must understand what is a share. It is a portion of the capital of the company. It is the unit to measure the amount of the assets owned by a person called a shareholder. Also, The share is a financial term to represent the capital of a company. The number of shares means the amount of the capital of a particular company. Certainly, there is a valued called face value for a share. Several factors determine it. Demand for any particular company share, distribution of profits, the reputation of the company, government taxes are a few of them. Different types of shares are available. Equity shares, bonus shares, right shares, preference shares are some of them.
But what is share market all about?
Companies require to expand their capital from time to time. The share market is the place where the company and the investors meet. Therefore, the shareholders and people who are willing to buy shares approach each other in the market to acquire or sell the ownership of shares. Buying shares means you are investing funds in the company. With the expansion of the company, the face value of the shares also increases accordingly. Again, you come to the market to sell those shares. As a result, it is a continues activity.
How to earn from share market?
A person can earn profits from shares in different ways. The amount of money that the person is going to invest in the market decides how much profit he will get on his investment. Similarly, the other factors include market conditions, the performance of the company where the capital is invested. Above all, It depends on the trading and investment knowledge of the person.
The companies distribute the profit known as dividend among the shareholders from time to time. So, getting this dividend as a form of profit is the primary way to earn money from shares.
Shareholders can purchase shares from the market and wait for the shares to increase their value. Shareholder earns a profit when the selling price is higher than the purchasing price.
“I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful.”– Warren Buffet (Most successful investors in the world).
Brokers act as the link between the share market and the investor. Hence, they charge a fee when you receive profits. They provide the platform, assistance, investment/trading tips and better investment opportunities for their customers.
Types of share market
There are mainly two types of markets having some basic difference.
Primary share market
Companies enter the primary market to increase their capital and raise funds. So, this is the market is where the new stocks are listed and published to the investors to buy. Companies become public once they have gone through the process of Initial Public Offering.
Secondary share market
The secondary market is the venue where the shares already purchased in the primary market. Therefore, they exchange through brokers and resellers.
What is share market risk factor?
If you are about to invest in the stock market, first get a clear idea of the share market and its function. With a proper sense of shares and understanding how to earn from share market, you can avoid losing your hard-earned money.
Don’t put all your eggs in one basket.
It means don’t invest all your money in one share or company. Use a portion of the funds to buy shares and get the support of a reputed third party to avoid the loss of funds. With the proper way of investing, it minimizes the risk of losings your valuable funds. Spreading your money across multiple investments avoids the risk of losing everything if something bad happens.
Investing in the share market is one of the best investment options available at present. You can start from a little amount of money which makes investing in the share market is an ideal option as a low-risk investment option. If someone asks you, what is share market? then you will be able to answer it next time. Let us know what you want to learn next?
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