Equity Investments: Benefits, Considerations, and Must-know Tips

Equity Investments: Benefits, Considerations, and Must-know Tips

Before you plunge into the vast ocean of equity investment, its benefits, considerations, and must-know tips, let us introduce you to the basics of equity investments.

Investment in equity shares has become a popular mode for earning higher returns and building wealth, especially post the Covid-led pandemic. The number of retail participants joining the active market is testimony to this fact.

Additionally, it is growing to be an excellent way to tackle the perils of rising inflation and ensure that your savings are not eroded over time.

Entering into investments in equity shares can be quite a tedious task for novice investors. Which stock do you pick? Which sector should you invest in?

How are the various factors influencing the market going to influence the price of the stock I pick? While investing in the stock market may help you grow wealth over time, there are a few intricacies you must take note of before investing in equity as an asset class.

What is equity?

Issue of equity shares is one of the most common ways of infusing long-term capital in a company. When a company goes public, it sells shares of the

company to investors and uses the money raised for business growth. When an investor purchases a certain percentage of stock in a company, they become part-owners of the company equivalent to their purchase.

In this way, you become a shareholder in the company. Being a shareholder also bestows certain rights and benefits upon the investor. Apart from the fact that a shareholder may sell their holding and book profits if they feel the price has appreciated enough, shareholders also get dividends as additional income whenever declared by the company.

Types of equity investment There are two common types of equity investments – equity shares and equity mutual funds.

Equity shares: There are more than 7500 companies listed on the stock exchanges. The price of each share changes by the minute depending on the demand and supply.

Stocks have a very high potential to appreciate in value and earn stellar returns for investors over the long term. However, stock investments are also one of the riskiest asset classes. Picking individual stocks can be a daunting task, sometimes even for seasoned investors. It requires a trained eye, understanding of market mechanics, and use of fundamental and technical analysis to be able to pick winners.

TejiMandi may be able to assist you with your investing journey. As Sebiregistered investment advisors, we have authorized professionals in the field with years of experience backing our stronghold through market research.

Being a subsidiary of Motilal Oswal Financial Services, we bring the same kind of expertise and skill to the table. Invest in Teji Mandi Portfolios Check out our article Smallcases Vs Direct Stock Investments here. Where would you put your money?

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