A stock represents a small ownership piece of a company. If you buy a share of a company, you own a part of that company, no matter how small. If the company grows and profits, so can your investment.
There are two primary ways to earn from stocks:
Dividends: Some companies pay part of their profits to shareholders, known as dividends.
Capital Gains: If a stock’s price goes up, you can sell it at a higher price than you paid, making a profit.
2. Why Do Stock Prices Change?
Prices fluctuate based on demand and supply, company performance, economic indicators, and investor sentiment. Good news can drive prices up, while bad news can cause them to fall.
3. What are Stock Exchanges?
Exchanges are platforms like the New York Stock Exchange (NYSE) or the Bombay Stock Exchange (BSE), where stocks are bought and sold. In India, the National Stock Exchange (NSE) is also popular.
4. Stock Market Basics
Bull Market: When prices are generally rising.
Bear Market: When prices are generally falling.
Portfolio: A collection of various stocks and investments that you own.
5. Investment Risks
Stocks are generally riskier than savings accounts or bonds, but they also offer higher potential returns. Diversifying by investing in different companies can help reduce risk.
6. How to Get Started To invest, you need a
Demat and Trading account through a broker (like IIFL). You can buy stocks directly, after opening an demat account.
7. Key Terms to Know Market Order:
Buy/sell stock at the current price. Limit Order: Set a specific price for buying/selling.
IPO (Initial Public Offering): When a company sells stock to the public for the first time.
Starting small, staying informed, and keeping a long-term view can help beginners make the most of stock market opportunities.
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