When we buy equities, we start looking at the price next day or next week. For many who call themselves investors,ong run is 1 month. But do you think the management of the business of which we buy shares really looks at their business growth in such a short period.
In equities, the rule of Farming applies. This basic rules states that –
1.You first have to sow a seed.
2. Keep watering it for it to grow.
3. Wait for some time with patience.
4. With passage of time, you will get fruits of your hard work and patience.
But when it comes to equities, we think that HAATHON MEIN HI SARSO UGTI HAI. We want good return in short time. How many of us really think of equities for long horizon? We keep Gold for generations. Grandparents go for bank fixed deposits for their grandchildren, but no one invests in share of banks, say HDFC Bank for their kid’s marriage. And, no one plans to invest in equity mutual fund for their retirement.
Fundamental Investing & Speculation
Equity give you two kind of return, one is speculative and another is fundamental growth. 95% of the investors in shares are here for speculative gain, that is gain from the short term price movement of shares. They start TIMING THE MARKET rather giving TIME IN THE MARKET. This approach for short term gains is the real cause of loss. Investment for long run is not only rewarding but also beats inflation by a good margin and creates wealth. Now think of Indian business or Indian Economy for next month, you will be clueless but think of it for next 5 years, 10 years. We know that you are aware of the answer.
Now people call equity risky. Unfortunately risk is not understood by many investors. In short run, risk is in volatility of price of underlying asset i.e., how much it can rise and fall given a period of time. But in long run risk is not volatility but the risk is to maintain the purchasing power of your money. Look at the price of petrol in last 30 years (in below chart) and then compare it with your return in FDs, Gold, Endowment or Money Back Plans. Why people don’t make money in Equities?
Just to give you comparison how equities have delivered returns over last 30 year, look at the graph below. The graph shows you how Rs. 100 invested in different asset class fared over last 30 years ending March 31st 2010.
Looking at the graph above, it must be clear that equities do give returns. But the question still remains unanswered that if Equity gives returns, Why people don’t make money out of equities. The answer lies in their EMOTIONS. The two basic emotions Greed & Fear will make you feel comfortable when the markets are going up and feel disheartened when the market goes down, even though one really don’t need to sell at that time. Always remember that equities is a long term investment and after you invest if emotions are making you restless, think about forgetting this investment. Checking daily profit or loss and anticipating the future growth has no meaning and is futile exercise.
In the end, invest in equities, but as a long term investor and partner the Indian Growth Story.
Give shape to your investments with our powerful tools & invest now.
A stock and a share are essentially one and the same. They both represent a part of the capital of a joint stock company. In India it was always called shares whereas in the US they have been referred to as stocks. They essentially mean the same thing.
The stock market trades equity shares of various listed companies. In addition, the markets also trade other instruments like index futures, index options, stock futures, stock options, VIX futures etc. Both equity and derivative products are traded in stock markets.
There are various sources for finding stock related information like the newspaper, websites, company annual reports etc. Brokerage houses like Tradebulls also provide a plethora of rich stock market content and analytics on the website itself.
Price of the stock is normally determined by growth prospects and the profitability of the company. Normally, based on the attractiveness of the stock a P/E ratio is assigned by the market. Stock prices also depend on demand and supply as well as news flows.
You choose stock by screening the stocks in the market on profitability, risk, valuations etc. Such analytics are available on the Tradebulls website for traders to easily create a portfolio. It is always advisable to check with your RM or advisor before taking portfolio decisions.
You can buy stock from the exchange platform provided by your broker. You can either buy stock offline at the branch or by phone or even online on the internet. A much simpler way to buy stocks these days is by downloading the broke app on your mobile phone.
There is nothing like a best time to buy the share because it depends on your trading / investment perspect
Schedule If You Want To Have a Tailor-Made Customized Plane.