Why to invest in Stock and how you can make money from it

by Rosy Thomas Investment Advisor

What are stocks and what is a stock market?

A stock or share is a part of a company. A stock is created when a private company opens its doors to the public. People can buy a stake in that company and that stake is called a stock or a share. When the company makes a profit, the people who own stock of that company also make profit in the form of dividend.

One can buy stocks online or through a stock trader, and can purchase one stock or multiple stocks at a time.

When a company goes public, the price of their shares is decided in an Initial public offering, that is an IPO. The overall worth of the company, its assets and the number of stocks they’re selling is taken into consideration while deciding this price. The stock or shares are then listed for stock trading on an exchange, like the Bombay Stock Exchange. The company only gets the price that buyers originally pay for their stock, when the stock is further traded, the company doesn’t make money off it.

A stock market is a place where stock trading takes place. Stock brokers buy and sell shares to make profit. The top performing shares are the shares that are most in demand and are bought most. When a share is not purchased, it’s price goes down and vice versa.

What is equity trading and why should you care?

Equity and stock trading are both considered to be the same thing, but they are not. Equity trading is essentially the purchase or sale of company stock through one of the major stock exchanges, just as stock trading is. An equity trade can be placed by the owner of the shares, through a brokerage account, or through a stock broker, in this way they are the same.

The key difference between equity trading and Stock Trading lies in their investment options and management firms. Equity trading firms specialize in offering in-depth market research, trading expertise, unique trading systems (even algorithmic), and have direct access to the trading floor for better executions. These equity trading firms predominately exist in the form of hedge funds and are setup to trade within a large investment banks.

People can invest in equity by setting up a systematic investment plan (SIP). In this plan you can invest a set amount of money every month, you Equity Trading firm will invest it in certain stocks. SIP isn’t a way to make fast money, but it can give you guaranteed returns. You can set up an SIP for your child’s education, their business, marriage or even for your own retirement. With the current market trends and investment patterns, the best way to invest your money right now is by trading on equity.