Investment in stocks can be a good option as the stock market is the lucrative one and it is the smartest decision one should take. But this market is also risky at times. If you are a beginner in this field you must read this article it will help you to understand the process of the whole stock market. As below information would be an apt guide to start investing in the stock market.
What are Stocks?
Basically, "the stock or the shares of stock, represents an ownership interest in an organisation or corporation. The stock pays the dividend to the owners. Dividends are basically the distribution of profits.
Types of Stocks
The stocks can be classified in two ways:
The Common stock is issued by companies which are granted to shareholders to share in the company’s gains/ profits through dividends. The Common stockholders have the voting rights which are directly related to a number of shares to be owned. All the Owners of a common stock have “pre-emptive rights” to keep the same proportion of ownership in the company over the time.
The preferred stocks are considered to be less volatile as compared to the common stocks. But they have less potential to gain profits. This type of stock does not have voting right when compared to the common stockholder. But yes they have more power to claim to companies assets. These stocks are the callable type of stocks which means, a company have the right to purchase the shares back from these stockholders anytime.
The Beginner’s guide to investing in the stock market:
The following do’s and don’ts will help you to start investing in the stock market as a beginner:
• Always try to prefer market mediators who are registered with SEBI (Securities and Exchange Board of India)/Stock Exchanges.
• Clear communication is must with your agent, the broker or with the mediator.
• One must carefully read all offer documents and the risk-bearing disclosure documents before investing.
• Always keep in mind before placing the order with the mediators, make yourself ensure that you have company’s credentials, the management, and other important pieces information.
• Be cautious of stocks showing sudden ups and downs.
• Make investment related decisions with due diligence, proper research and analysis.
• Never deal with the brokers, sub-brokers mediators who are not registered with SEBI or with other Stock Exchanges.
• Don’t blindly believe in the herd mentality, or all the media reports and speculations.
• Don’t let your emotions of greed enter your mind as it overshadows your true wisdom.
• Always read and understand all the documents fully then execute it for further proceedings.
We hope this article will help beginners and if you have more queries than you can take help from any stock advisory like TradeNexa. The advisory firms provide expert advice in the form of Share Market Tips.