WHAT IS STOCK MARKET AND ITS BENEFITS?

by daksh mehta fitchunks

What Is Stock Market and its benefits?

It is a place where shares of pubic listed companies are traded. A stock exchange facilitates stock brokers to trade company stocks and other securities. ... A stock may be bought or sold only if it is listed on an exchange.

Types of Stock Market

1) Income Stocks. As its name suggests, this security generates a steady and stable income in the form of a dividend. ...

2) Cyclical Stocks. ...

3) Blue-Chip Stocks. ...

4) Tech Stocks. ...

5) Speculative Stocks. ...

6) Defensive Stocks. ...

7) Growth Stocks.

Advantage And Disadvantages Of Stock Market?

Advantages of Investing in the Stock Market

1. Chances of Exceedingly Good Returns in Short Time

Even in the past people have gained exceedingly good returns on their stock market investments, and you always stand a good chance to earn huge profits when you decide upon stock market investing. So, when you invest in the stock market in India, although you put yourself at a lot of risks, you are also in a position to earn good returns in a very short time.

Read Benefits of fundamental analysis for more

2. Minority Ownership

Well, it does sound like an exaggeration, but when you put your money in a reputed company’s stocks, you become a part-owner of the company, irrespective of however smaller your share may be. You can improve your standing in the market by sagaciously putting your money in different companies. Moreover, you can exit whenever you want.

3. Right to Vote

Minority ownership gives you the right to vote and voice your opinions at the corporate level.

Disadvantages of Stock Market Investment

1. Volatile Investments

Investment in BSE is subjected to many risks since the market is volatile. The shares of a company go up and come down so many times in just a single day. These price fluctuations are unpredictable most of the time and the investor sometimes have to face severe loss due to such uncertainty.

2. Brokerage Commissions Kill Profit Margin

Every time an investor buys or sells his shares, he has to pay some amount as a brokerage commission to the broker, which kills the profit margin.

3. Time Consuming

Investment in NSE is not as easy as investing in a lottery as you have to complete many formalities in the process and hence is time-consuming.