Making Money from Equity Investments

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Making Money from Equity Investments
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• The term 'equity investment' means buying and
  holding shares of public companies trading on the
  Mumbai Stock Exchange.
• By buying the shares, the investor becomes a part
  of the company.
• It has a number of advantages, including the
  right to vote to hire management, share in
  profits and potential preference for new shares
  of the same company.
• Equity is one of the few ways to make a lot of
  money.
• Equity is for individuals or firms looking to
  play a 'high risk, high return' game.

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• This is preferable for investors with relatively
  high risk appetite.
• This is because of the risk of losing the entire
  investment.
• Investing in stocks should be a wise and
  well-researched decision.
• The share price is directly related to the
  performance of the company.
• As a result, it is important to choose promising
  companies that will be consistently profitable,
  allowing you to grow over time.

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• As mentioned earlier, when an investor buys a
  stock, he or she becomes the proportional owner
  of the company based on the number of shares
  purchased.
• There are five ways for investors to make a
  profit from equity investing

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Dividends

• As an owner, the investor is entitled to a
  portion of the company's profits.
• If the company chooses to distribute its profits
  as dividends, the investor receives a fixed
  amount for each share he owns.

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Capital gain

• When the market value of a stock rises, the
  investor benefits as he or she can make a profit
  from the sale of the holdings.
• Over a period of several years, the investor can
  make up to 50 times more than his initial
  investment.

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Buyback

• The Company may announce that it will buy back
  shares from its shareholders at a price higher
  than the market rate.
• Although not every investor wants to sell their
  shares, the buyback window allows them to make a
  profit.

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Rights issue

• When issuing new shares, the company may offer
  discounts to existing shareholders.
• Profits can be made by buying shares at a lower
  price and selling them at a higher market price.

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Bonus issue

• If a company performs exceptionally well, it can
  issue free shares to its shareholders.
• These extra shares quickly start trading at
  market prices, giving investors a better chance
  of making a profit.
• Visit squareoff.co.in to learn the stock market
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