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73 pages

English

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When you invest money, it implies that you want to make an increment to your capital. Investing is more prone to risks than saving. But more the risk, more the gain, as the principle of Economics says. It also guards the investor against the impact of inflation which are more prominent when the money is invested in less risky saving schemes. Also, if you invest wisely, you can do away with the risks involved in investing. By investing in diversified portfolios, a balance can be maintained between RISK and GAIN.

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Gestion et management

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Publié par	Diamond Books
Date de parution	06 avril 2020
Nombre de lectures	0
EAN13	9789352785025
Langue	English

Informations légales : prix de location à la page 0,0150€. Cette information est donnée uniquement à titre indicatif conformément à la législation en vigueur.

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How to Multiply Your Money in Share Market?

eISBN: 978-93-5278-502-5
© Publisher
Publisher: Diamond Pocket Books (P) Ltd .
X-30, Okhla Industrial Area, Phase-II New Delhi-110020
Phone: 011-40712100, 41611861
E-mail: ebooks@dpb.in
Website: www.diamondbook.in
Edition: 2017
How to Multiply Your Money in Share Market?
By - Dinkar Kumar
When you invest money, it implies that you want to make an increment to your capital. Investing is more prone to risks than saving. But more the risk, more the gain, as the principle of Economics says. It also guards the investor against the impact of inflation which are more prominent when the money is invested in less risky saving schemes. Also, if you invest wisely, you can do away with the risks involved in investing. By investing in diversified portfolios, a balance can be maintained between RISK and GAIN.
INDEX Things to know about shares Key to the fast track to riches Know the share market Plan and diversify your Fixed Investment Portfolio If you are not an expert, invest in Mutual Funds Investing in shares while keeping your Capital intact Do not let fluctuations disturb you, invest for long-term The freedom of reinvesting dividend Discipline your investment by dividend reinvestment Want to book profit - follow FIFO (First in First out) Regular investment brings magnificent results Pay tax, if you sell shares in a buy-back ‘MIN’ is essential for investment in a Mutual Fund Invest from your own pocket for Esop shares Investment in the foreign capital markets Tips for securing your money from losses in a share market The concept of saving and investment A free index in the share markets Do’s and don’ts for the investors Can a person borrow against shares ? Mutual Fund, i.e., less risk Invest in a Mutual Fund with proper care Choosing a Mutual Fund Scheme Invest in the shares after proper investigation Buying Mutual Fund units or higher NAV is profitable SIP—A fine way to invest in equity How to choose a Mutual Fund Scheme ? Investing in equity-linked schemes is profitable Invest keeping in mind the basics Mutual Funds pay dividend distribution tax Collect information before investing in an IPO Mutual Funds are thrifty Portfolio Managers There is a need to understand the Mutual Fund Why are the investors inclined towards N.F.Os ? A long-term investment is the remedy for market variations Adjust, if you want to reduce the impact of a fall There are separate provisions of taxation for a trader and an investor The secret of success of Warren Buffet- the great investor of the world Tips for the investors Analyse before selecting a share Think before choosing a share broker Strike a profitable deal in the share market Mental exercise is necessary before investing in a Mutual Fund The encouraging environment of the share market • Useful newspapers and magazines • Important websites • Important addresses

1
Things to know about shares

You must have heard about the stories of windfall gains people make at the share market and then might have wished to be one of those lucky ones. On the other hand you must have come across the news of a friend loosing all his wealth overnight at the same place and trade and then you must have been able to console yourself and thanked God that you were not a part of this ugly and tricky game.
But now we will try to leave aside this prejudice against the share market and move ahead to understand what actually SHARE is!!
A wise investor makes buying quite intelligently and they get success in reaping gains too.
Studies show that in the long term a ‘share’ earns more than any other asset. It means that you can earn more by investing in a share than that in a fixed deposit bond or Gold.
This is true that share market is fraught with uncertainties, but if you are a long-term player, no one can stop you from making profits.
But before you proceed towards the share market, you must understand a few important things very clearly.
1. SHARE is not for the BRILLIANT only
Understanding a share doesn’t need the expertise of a Space scientist. It does not require a very intelligent person to formulate a strategy of maximum growth in your assets by choosing the right channels of investments and thus keeping the reasons of losses away.
If you think that you don’t have enough time, you can invest through a portfolio manager or Mutual Fund but for that you need to know certain basics. You ought to find out which fund is performing better, how to select a fund manager and also how to keep watch on the performance of the Fund.
2. What is a Share ?
In any business, there are several kinds of assets—Machinery, buildings, furniture, cash etc. Similarly, there are liabilities in the business. The company owes to others, e.g., Bank loan, creditors against supplies are known as liabilities.
Total assets as reduced by outside liabilities form the owner’s capital or say the principal
Assets - Outside liabilities = Principal (owner’s equity)
Principal is the amount which is with the owner of the business. As the business grows and there are profits, there is a corresponding increase in the amount of principal also.
This principal or owner’s equity is divided into Shares (or Stock). If a company’s net worth is Rupees 10 crores, it may be divided into 1 crore shares of Rs. 10 each. A part of this principal or the net worth remains with those who start the business and they are called Promotors. The other part (of the total shares) is with the investors from the public, Mutual Funds and other Institutional Investors.
3. What is meant by buying a share?
Now, you must have understood that buying a share in a company is equivalent to acquiring a share in the ownership of the company.
When you invest in a share, you don’t invest in the market. You invest in the equity share of a company and hence become a shareholder or a part owner of the company.
Since you are one of the owners of the company, you automatically become a participant in the profit or loss arising out of the assets of the company. For example, suppose you are an owner of 100 shares in Gujrat Ambuj a Cement Ltd. it means that you are the owner of a very small part of the capital of the company, since the capital of the company is divided into lacs of shares.
Buying a share means becoming one of the owners of the company without having to face the day to day operational troubles of the business. For example, if Gujrat Ambuja earns profits, there may be an increase in the value of your share and vice-versa.
4. What is meant by increase in the value of a share?
If a company has divided its Principal or the Share Capital into shares of Rs. 10 each, then Rs. 10 shall be called the ‘Face value’ of the share of the company. When the share is traded in the market, viz, the Stock Exchanges, there shall be an increase or decrease in the market rate of the share according to its demand and supply. If everybody wants to buy the shares of this company, there shall be an increase in the rate of this share. If no one is interested in buying these shares and more and more people want to sell the share, the rate will go down.
At any point of time, the price prevailing for a share in the market is known as the ‘Market rate’ or the ‘Market value’ of the share. Thus a share of the face value of Rs. 10 may be traded in the market at say Rs. 55 (higher than the face value) or Rs. 9 (i.e., lower than the face value). When you multiply the market value of the share of a company with the number of shares of the company, you get the Market Capitalization of the company. If, suppose, on a particular date, a company having its share capital divided into one crore shares of the face value of Rs. 10 each and having the market rate of its share at Rs. 30 on that date, its market capitalization or Market Cap(as it is commonly known) shall be Rs. 30 crores.
5. How to Purchase a Share?
It’s good that you want to try your luck in the share market. Shares are traded at the stock exchanges. There are two main stock exchanges in India, viz, National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).
A share can be purchased in any of the three ways: Though your Broker Through on-line trading, or At the time of the Initial Public Offer (IPO) made by a company.

2
Key to the fast track to riches

You may find an astronomical difference between the earnings from the savings schemes of the banks and that from the investments in the share market. You can earn huge profits at the share market. You must have heard how some people doubled their money within a year. Also, it so happens that when the shares downslide, a fourth or more of the capital of an investor may be wiped out.
Just compare your fixed deposit with a bank and the investment in the share market. You receive only 5 to 6 percent return in a year on your fixed deposit with the bank, but your principal and the return, both are guarantee.
When you deposit your money in the bank, it means that you lend money to the bank for a fixed term and at a fixed rate of interest (i.e., rate of return). At the end of the term, the bank returns the principal along with the interest (or your profit).
When you invest in a share, you don’t invest in the market (as many people think). You invest in the equity share of a company and hence become a shareholder or a part owner of the company. The brighter side of this feature is that since you are one of the owners of the company, you automatically become a participant in the profit or loss arising out of the assets of the company. The risk involved is that being one of the owners, you have to participate in the losses of the company as well.
If you are a shareholder, then there can be two ways of getting benefits from your investment : Capital appreciation dividend
Dividend
Dividend, generally, is the profit distributed to the shareholders. For example, a company earns a profit of Rs. 1 crore in