Lets have a look on how shareholders earn through stock markets.But,before going to that it is necessary to touch couple of topics i.e 'Face Value' or par value or nominal value and 'Market value' of the share.
Face Value: Face value or nominal value is the value of the share which is printed on the share document,in general Indian shares have Rs.10 as a face value.
Market Value: When the shares are listed in the share market,value of the share fluctuates depending on the various factors.I'll give one factor,If the performance of the company is good then shareholders try to buy the share for more price ,by this the market values goes up.If the performance of the company is poor then its market value goes down...
Lets go into the topic now.. Basically making money by share markets are by two ways.They are
Long term or Investment way
Short term or Speculation way
Long term or Investment type:Share holders those who want to earn after a period of time to achieve their future needs are simply called as Investment type of earning.
suppose a share holder purchased shares to makes a plan to earn Rs. 10000 after 2 years i.e called long term investment and the plan which he made is simple we call as 'Port Folio'.These type of share holders are simply we call as Inverters.
Remember such share holders make money only by means of Dividend(Refer 'what is a share' post to know about dividend).Dividend is only given on the Face value of the share but not on the market value.
These type of investments have less risk when compare to the Speculating type.
Short term or Speculation type:For the better understanding i'll give an example.
A person went to a bookshop and took a book for Rs.100 and he sold it to his friend for Rs.120.Then what is his profit?? Its Rs.20 right..Even a school kid knows that..
Similarly, in Speculating type people buy shares only for the short period i.e one day or two days,etc and they sell it when the market price is greater than the purchased price to get the better profit.Think that right now ABC company share is trading for Rs.50 and i have purchased it and after sometime if the market value goes to 55 then i'll sell it and earn Profit of Rs.5...It is nothing but speculation.
Remember these type have more risk because its difficult anyone to predict whats gonna happen,even the market value goes down..then need to bear a loss too..
Those who do Speculations such share holders are called Speculators.Basically Share holders take Equity shares for these purpose of earning and they are the major players in the Share market....
we will be discussing about the jargon's(typical words) of share market(like Bull,bear,etc) in upcoming posts...
(I will be glad if you send your suggestions or feedback to the mail id basiclionmarket@yahoo.com )
Face Value: Face value or nominal value is the value of the share which is printed on the share document,in general Indian shares have Rs.10 as a face value.
Market Value: When the shares are listed in the share market,value of the share fluctuates depending on the various factors.I'll give one factor,If the performance of the company is good then shareholders try to buy the share for more price ,by this the market values goes up.If the performance of the company is poor then its market value goes down...
Long term or Investment way
Short term or Speculation way
Long term or Investment type:Share holders those who want to earn after a period of time to achieve their future needs are simply called as Investment type of earning.
suppose a share holder purchased shares to makes a plan to earn Rs. 10000 after 2 years i.e called long term investment and the plan which he made is simple we call as 'Port Folio'.These type of share holders are simply we call as Inverters.
Remember such share holders make money only by means of Dividend(Refer 'what is a share' post to know about dividend).Dividend is only given on the Face value of the share but not on the market value.
These type of investments have less risk when compare to the Speculating type.
Short term or Speculation type:For the better understanding i'll give an example.
A person went to a bookshop and took a book for Rs.100 and he sold it to his friend for Rs.120.Then what is his profit?? Its Rs.20 right..Even a school kid knows that..
Similarly, in Speculating type people buy shares only for the short period i.e one day or two days,etc and they sell it when the market price is greater than the purchased price to get the better profit.Think that right now ABC company share is trading for Rs.50 and i have purchased it and after sometime if the market value goes to 55 then i'll sell it and earn Profit of Rs.5...It is nothing but speculation.
Remember these type have more risk because its difficult anyone to predict whats gonna happen,even the market value goes down..then need to bear a loss too..
Those who do Speculations such share holders are called Speculators.Basically Share holders take Equity shares for these purpose of earning and they are the major players in the Share market....
we will be discussing about the jargon's(typical words) of share market(like Bull,bear,etc) in upcoming posts...
(I will be glad if you send your suggestions or feedback to the mail id basiclionmarket@yahoo.com )
2 comments:
It is easy to make money from stock market if a person has guts to handle risk and rewards in the market. Investors use various strategy just like day trading, positional trading, swing trading or long term trading to make profit in the stock market.
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