What is Share Market and How to choose the Best Investment Plan with Little Money, Learn in Easy and Simple Language>
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| Updated on 02-03-2021 | Brief Introduction to Share Market and Best Investment Plans |
Hello Friends, I welcome you all to my blog Sewa Diary.
This is my 1st article on the topic of Share Market and I hope it's going to be very useful and interesting for my readers, especially for Students, Young professionals, Old age people and the Investors who are new into the world of stock market.
Today I’m existed to share my opinions regarding the Share Market based on my practical experience of 4 months.
I started taking interest in the concepts of share market from the month of December 2020. I always wanted to invest in share market since my graduation but due to some myths and misunderstanding, I couldn’t get enough courage to invest anything.
But in January 2021 I got a Guru of Share Market. He cleared my myths and all the doubts that I was having in my mind since my graduation. However I am a student of commerce & finance But yet I was unable to deal in share market. But when I met my Guru, he said that:
Dear Yogesh! Your money is not safe anywhere. If it has to be stolen, then it can happen anywhere either from your house, bank, pocket or from the Share Market. It depends upon you that how much you are vigilant about your funds. The scam of Nirav Modi in PNB proved that your money is not also secured in the lockers of government banks.
So, from that day my perception changed completely. Then I started thinking in positive manner with the perspective of future or long term period.
After getting clarification on the basic things of share market, I decided to share my concepts with audience.
So, let’s being with basics.
Table of Content:
Share Market & its Types
Share Market is the marketplace where companies registered themselves to raise funds from potential investors. After getting listed in Share Market, these companies issue different type of securities at different rates according the market trends and the nature of investment.
There can be many types of securities like Shares, Debentures and Bonds etc. But as of now I am going to talk about only shares.
Mostly, companies issue Shares for getting investments from the investors. These investors provide funds to the companies and in return they receive consideration in form of Dividends or Bonus.
Further, there are two types of shares; Equity shares and Preference shares. Equity shareholders have the ownership status in any business organization. They have voting powers and their contribution can change the entire decision making process of a business.
Investment Planning
Prepare for the best But Ready for the worse — During my training with TATA Consultancy Services (TCS), my trainer “Sir Praveen K Vyas” used this diamond line for teaching me the rule of life. Whether you are a student or an employee, this thumb rule is applicable at all the stages of our life. And in share market, it is much frequent than the any other field.
Investment Planning is the most important function where an investor has to set his mind in such a way that whatever the decision he will take it must be taken after research and not be taken in hurry.
An investor has to think like an investigator and act like a horse. He has to make research in the market to find out which companies are growing and which are just stable in nature, like in current scenario the share of Reliance (NSE: RIL) moves between ₹1.00—₹3.00
After doing research in the market, next step is to take faster decisions but not the wrong decisions. Keep in mind that your present decisions are one which will decide the future of your family. For an example, in current scenario if you invested huge amount in a cheap price share without checking the scope & financial soundness of the business then definitely you’re adding darkness in your future. Your time is much valuable than money but for saving a little penny, please do not waste your valuable time.
So, if you want to be a long term player then start thinking like an investor and do not think like a beggar or gambler.
Meaning & Type of Portfolios
In share market, Portfolio means collection or group of companies which is made by an investor according to the type of returns he expect to get in future. For example, if a student investor wants to get only fixed income every month in his old age time, then he can invest only in Dividend Payout Companies instead of investing in long term shares or shares with fixed margins.
In this section, an investor has to implement his investment plan into different types of portfolios. This is the time when use his knowledge of market research with the speed intensity of a horse.
In share market, each small second can make much huge difference in terms of money. Taking right decision at the right time is a key factor in deciding the fate of a person.
During lockdown especially between March 2020 to July 2020, All the economic activities were badly affected. Share prices of companies like TATA and GAIL were seen at an extraordinary low prices. So, the persons who invested in that time, now they have gained 3-4 times of the amount they invested.
Let’s see how many portfolios you can make to invest your money in high profitable ventures.
Type 1. Long Term Shares
These shares are like Land & Building (fixed assets) for me. It means i purchase them for more than 1 year, 5 year or for lifetime. I do not sell these shares when they shows minor changes and not even when they make major changes. I hold these shares with the expectation of getting capital gain in future. Therefore, if you’re a new investor then you should start the research looking at these shares first.
Type 2. Shares with Fixed Margin Equivalent to Fixed Deposits
In this type of portfolio, investors purchase and hold the shares till the time they get the return on investment equal to or higher than the interest rates of Fixed Deposits. For example, interest rate on fixed deposit accounts of banks is maximum 8%, but at the same time if investor is getting 11% in share market then he can sell his holdings to get the money deposited into his bank accounts with dividends.
Type 3. Penny Shares
The cheap priced shares are called- penny shares. These shares are priced very low and investors often purchase these stocks in bulk quantities for gaining short term benefits. When a minimum margin is received, these shares are sold by the investors. In my opinion, it is a best option to trade for intraday traders.
Type 4. Portfolio of Dividend Payout Companies
Dividend is a part of company’s profit which is distributed among investors after paying all the expenses, taxes and retained earnings. An investor can create a group of companies which pay dividends on the regular basis. For example: companies like ITC, TCS, Infosys and other Government companies pay fixed rate dividends every year to investors. Even sometimes they also pay dividend in advance, which is also called interim dividend. So, if you’re a student or a young professional then start adding large number of shares of these companies so that whenever companies pay the bonus or interim dividends then you can get maximum return on your investment.
Type 5. Multi Baggar Stocks
As per Wikipedia: A multibagger stock is an equity stock which gives a return of more than 100%, which means a share price is doubled than the previous price. If old price was ₹1000 per share, now it means it’s trading at ₹2000 per share and after some days it opens with ₹4000 per share. So, the shares which increase in this sense— are called Multi Baggar Stocks. For example: Share of company ‘Motherson Sumi’ is one of the best multibaggar stocks in Indian Market.
Type 6: Invest in Mutual Funds
Mutual funds are collective funds of small investors which is invested by a experienced investor in buying collective stocks of different companies. The main benefit of investing in mutual funds is Less Risk and Less chances of fraud because here only 1 experienced and authorized person does work on behalf of multiple investors. For an example: SBI Bank provides a facility of investing in mutual funds via its separate branch of investment called ‘SBI Focused Funds’ and Axis Bank provides via ‘Axis Focused 25 Funds’.
So friends, in my Guru’s opinion these 6 types of different investment plans and portfolios if set in your mind then you will not get confuse with your future aspirations. You just need to be an honest and hardworking person for your work. Except, leave it on the God and let the Karma play its role to decide your destiny.
Thank You for reading this article and I hope I will see you again in my next article very soon.
God bless you. Jai Hind.
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