What Is Stock Market??

  A lot of people come to the stock market and what happens to them? People invest their money and sometimes destroy their wealth.

 They tell everyone that the share market is like gambling. That it is impossible to make money from it. But friends, if you do thorough research and give your investment some time and keep your investment for long period then you can become a good investor in the share market. First of all, let me tell you what does the word market in the share market stands for. In any market, there will be two parties who exchange something or the other with each other. Similarly, when I talk about the financial market, there are two parties. One party that needs money to run its business. and the Second-party who has extra money that needs to be invested somewhere. Imagine there is a company that needs money to run its business. It uses the financial market to get money from investors which it uses for running its business. How does the investor give money to the company? How does this transaction happen? This transaction happens in two ways. The first method is shares. Imagine that a company is worth 100 rupees It has ten shares. So one share is worth ten rupees. To get money, the company sells its two shares. Two shares were sold, so one investor gave twenty rupees for two shares. In this way, the company gives away its shares and the investor gives money for those shares. A feature of the share market is that for every share, an investor gets a certain percentage of ownership in a company. How many shares they buy they become owners to that much of the company. The second method is debt. Debt, like when we take loans. Likewise, companies take loans and pay interest from time to time. After a point of time, they have to pay the full principal amount. Now you must be thinking about why the investor bought the shares of this company. How does it benefit the investor? An investor can be benefited from buying shares in two ways. First: price appreciation. To explain it in simple terms The first investor bought the shares of the company for ten rupees. Assume that the price of the shares doubled and became twenty. So the investor got ten rupees profit on each share. This is called share price appreciation. Second: which investors like us commonly ignore. But friends, dividends are very important. What are dividends? Imagine that the company after running its business made a profit of rupees 100 in a year. Out of 100 rupees, the company kept 30 rupees for future expansion How much has it left? Seventy rupees. This 70 rupees of profit is distributed among the shareholders. Assume that the company had ten shares then each shareholder gets seven rupees. This is called the dividend. To explain it again, out of its profits, the amount after deducting what the company saves for future expansion that remains is distributed among the shareholders, the portion each investor gets is called a dividend. An attribute of the dividend is that it is entirely upon the company to decide whether or not it wants to give out dividends. Because many companies don't give dividends saying that it invests all of its profits on itself. To give you an example of price appreciation a good example would be MRF shares. The shares that used to trade at 1500 rupees. For those who bought it then, it became 70,000 at some point in time. Whenever we talk about price appreciation many examples come to our mind. But we don't pay enough attention to dividends. Come on, let's talk about a company that has paid dividends to its investors from time to time. Because dividends are also a good means of income. And investors should pay more attention to it. To talk about dividends, a good example is Coal India. The current share price of Coal India is around 130. And this company has till now paid over hundred rupees of dividends to its investors. So you can imagine how much profit you can make via dividends too if you choose a company that gives good dividends. If you are still confused about dividends, dividends come directly to your bank account whenever the company declares dividends. Friends, in this blog, I explained the basics of share markets. Today we’ll stop here only. Will soon meet you with another interesting blog. Till then Goodbye and take care!!