Equity Stock or Shares are units of a company that can be invested in by individuals or organisations with a Trading & Demat Account. Any company listed on stock exchanges such as BSE, NSE, etc. can be invested in by prospective investors. Investing your funds into a particular stock grants you ownership up to the purchased value. i.e. assuming a company has 100 shares and you invest in 1 share, you have ownership of 1% of the company.
Investing in shares is generally aimed at increasing your money’s worth. Due to market factors & the company’s performance. The price of a company’s shares may rise or fall. Investors aim to purchase such shares whenever the prices drop and hold them for the long-term, estimating that the value of their investment will grow in tandem with the company’s growth. Traders on the other hand aim to target daily/short-term fluctuations in stock prices and profit by buying low and selling high.
This ownership can grant you the chance of earning further funds via two major methods, viz. Dividends & Sale proceeds.
Owning a share entitles you to earning a dividend as and when one is declared by the company, to continue with the earlier example if you have 1 share out of a 100 and the dividend declared by the company is ₹10,000, you would be entitled to ₹100 as dividend.
Sale Proceeds refer to the amount earned by you after selling the shares owned. Depending upon the company’s performance or the overall market’s ebbs & flows the market price of a stock is liable to change. Traders and market experts aim to tap into this opportunity and purchase stocks at a lower price and sell them when the price rises.