How to invest in Equity

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Invest in Equity
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Equity Investments

• An equity investment generally refers to the
  buying and holding of shares of stock on a stock
  market by individuals and firms in anticipation
  of income from dividends and capital gains, as
  the value of the stock rises.

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What are Shares?

• A SHARE is a unit of account for various
  financial instruments including stocks, mutual
  funds, limited partnerships, and REIT's. In
  British English, use of the word shares in the
  plural to refer to stock is so common that it
  almost replaces the word stock itself. And
  especially in American English, the plural stocks
  is widely used instead of shares.

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Types of Shares

• Equity Shares These shares are also known as
  ordinary shares. They are the shares which do not
  enjoy any preference regarding payment of
  dividend and repayment of capital.
• Preference Shares These shares are those
  shares which are given preference as regards to
  payment of dividend and repayment of capital.
• Deferred Shares These shares are those shares
  which are held by the founders or pioneer or
  beginners of the company. They are also called as
  Founder shares or Management shares.
• Bonus Shares The word bonus means a gift given
  free of charge. Bonus shares are those shares
  which are issued by the company free of charge as
  bonus to the shareholders. They are issued to the
  existing shareholders in proportion to their
  existing share holdings.

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How To Invest In Equity?

• Before investing, you should first consider these
  factors that will determine when, where, and how
  to invest in Equity
• Best use for your money
• Your objective for investing
• Your Age
• Time before you need the money
• Risk tolerance

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How To Invest In Equity?

• Best use for your money
• The most important factor to consider if
  it is the right time for you to invest is to look
  at the best use of your money.
• For example, wouldnt it make more
  sense to pay your debt? The money you are
  spending on the interest of your high credit card
  debt may be higher than what you might earn when
  you invest. For example it makes sense to pay
  off that credit card debt that is costing you 20
  per year, before investing on mutual fund or
  stocks where you realistically expect to earn 10
  or less.

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How To Invest In Equity?

• Your objective for investing
• A factor that determines where to
  invest your money is your objective for
  investing.
• Identify your objective, given your
  needs, life stage and resources. If you want to
  increase the value of your investment in order to
  have a larger sum to spend at a later date, your
  main priority will be capital growth.

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How To Invest In Equity?

• Your Age
• A factor you should consider to
  determine where to put your investment and how
  much to invest is your age.
• In investing, being young has an
  advantage. You are able to wait a longer time
  for your investment to bear fruit. While young,
  you are also more secure, you do not have a lot
  of responsibilities, you have more disposable
  income, and you can pick yourself up easier when
  you make mistakes. Therefore, when you are
  young, you can get into investments that are
  riskier but can potentially earn above average
  earnings.

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How To Invest In Equity?

• Time before you need the money
• Not everyone invests to retire, some
  investments have shorter goals. Therefore,
  another factor you should consider to determine
  where to invest is the time you have before
  turning your investment into cash.
• The longer you can stay invested,
  the more you can take risk (and hopefully get
  more gain) since you can still recover from any
  potential loss. If you do not have a lot of time
  and taking a loss would be disastrous to your
  plan, then it is best to stick to less risky
  investments like bonds.

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How To Invest In Equity?

• Risk tolerance
• As a general rule, the higher the risk of
  an investment, the more potential for higher
  return.
• However, not everyone can take risks with
  their money over a certain level.  Not everyone
  is comfortable with the ups and downs of the
  stock market. For eg., You may be so averse to
  risking your money that a potential higher rate
  of return may not be worth the stress and your
  losing sleep.
• If your personality is one who can accept
  losing money for the possibility of getting much
  more profit on your investment, choose aggressive
  investments such as growth stocks.
• If you are the more conservative type,
  choose the relative safety of bonds.

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Reference

• Wikipedia.org
• Dspblackrock.com
• Budgetingincome.com
• Indiastudychannel.com

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Thank You