Stock Market Full Information Here in Details Stock Market How easy to earn money in
Stock Market Full Details A TO Z… What is stock market and How it Works what are the benefits will get in stock market why should invest in share market in telugu etc…. find below….
As being an employee, I will receive a handsome of amount called salary at the end of every month. After spending money for our daily needs and expenses some amount will be left over in my bank account, by this article I just want to share how I am producing my alternate source of income.
At the starting of my career I had dream just like every on to buy a house, car and jewelry for my family. So I started to save the left over money in my bank account only. At a point of time I have noticed that every day the value of currency is getting and this effect is called inflation.
Main topics in stock market to know
What is stock market?
Types of trading
Stock market timings
How can we earn profits by investing in stock market?
What is inflation? Why does it happen? How it impacts our saving?
In simple terms if you exchange 1USD (US Dollar) in 1990 with INR (Indian Rupee) the sum of amount you will get in return is 17.5 INR, same as in 2022 if you exchange 1USD with INR the sum of amount you will get 79.4 rupees. This illustrates how INR values decreases day by day and this phenomenon is called inflation.
After knowing this, the first thing that will come into our mind was how this effects our daily expenditures:
For this I would to present a comparison chart with some everyday commodities,
|Everyday Commodities||Year 1990||Year 2022|
|Petrol||9.84 rs per lts||109.66 rs per lts|
|Diesel||4.10 rs per lts||97.82 rs per lts|
|LPG||57 rs per 14.2kg cylinder||1055 rs per 14.2kg cylinder|
|Gold||320 rs per gram (24k)||5162 rs per gram (24k)|
The inflation rate in India is 5.13% per year and the rate of inflation increases when the average price of products & services increases because of high demand and low supply of products and services.
We can precisely say that inflation reduces the value of our saved money.
How I am not effected by the inflation?
Instead of leaving the extra money in my bank account which will reduce the value of my savings of about 4-5% a year I prefer to invest my savings.
When I’m looking to invest I found there are 5 common ways to invest my money and earn good amount of returns and before investing we have to consider three major things;
- Risk involved
- Returns expected
- Time required
Four different ways to invest money:
- Fixed deposit :
In a fixed deposit you can deposit a sum of amount for a fixed time at an agreed rate of interest. A fixed deposit offers a guaranteed returns. An approx. banks can offer 6-7% of interest which is slightly greater than the average inflation rate.
- Gold :
It is considered as a safest way for the investors to invest. Being a physical commodity it is easier to it will be highly liquidity in case of emergencies. Its value frequently changes in the opposite direction of stock market.
- Real Estate:
Investing on a physical properties needs huge sum of money. Incase if the investment fails to get expected returns. We can generate passive income by investing in real estate and can become an asset for our future generations. The only dis-advantage is it need huge amount of capital.
- Share market or stock market:
A share market is a place where shares of a particular company can be bought and sold. This is similar to that of super market where in you buy a product buy a product by paying him the specified amount. In share market the product is the “share in a company”, all we need to pay the amount and buy a share which grow with growth of company.
Among this four methods of investment I prefer to invest in share market as buying a shares of that company means buying some percentage of ownership in that company. If that company makes a profit we can also get some percentage of that profits as we hold some shares in that.
What is stock market? How can we earn profits by investing in stock market? What is the risk involved in investing in stock market?
Let’s assume you have started a company with a capital of 1000 rupees after running your business for a certain time, you have gained some profits and its net value increased to 1600 rupees. After getting profits you want to expand your company which requires more capital. How do you raise capital? You would seek banks for loan but the interest rate was too high to afford then alternate way to raise the capital fund is to sell shares of your company. The shares of your company is open to public where they can buy and sell the share for profits or losses respective to the company.
A point to be noted here is that every share of the company has equal value, it’s upon the company to decide how many of its shares it wants to make if the company value is 50 lakh, then it can make 1 lakh shares of 0.5 Rs each or 50 thousand shares of 1 Rs each share.
Whenever a company wants sell its shares, they will not share entire stocks instead they hold more than 50% of shares. So that the decision making power remains with them. If you sell all the shares, then all buyers of the shares would become the owner of the company.
A stock exchange is a place just like a super market where you can buy and sell stocks of a company, In India Bombay Stock Exchange and National Stock Exchange are like super markets which will regulate share of different companies. However there is one catch, the prices in a super market are fixed but in the stock market, the prices of stocks are varying every second because of supply and demand.
- Bombay Stock Exchange (BSE): It has around 5400 registered companies. The measurement to monitor the performance of stocks is Sensex.
- Sensex: It shows the average trend of top thirty companies of the BSE, By averaging out it demonstrates the performance of shares of the companies are moving up and down.
- National Stock Exchange (NSE): It has around 1700 registered companies. The measurement to monitor the performance of stocks is Nifty.
- Nifty: It shows the price fluctuations of the shares of top 50 companies listed on the national stock exchange.
If buyers are more (Demand >supply) then the prices moves up. Similarly if sellers are more (Supply > demand) than buyers the prices will fall. Moreover this supply and demand work on many factors like positive and negative news about the company, introducing new product and many more.