The stock market is a concept or probably a term that most of us are acquainted with. You may know all about it while there may be some who have just heard of it and does not know the in-depth details of it. While it is important for everyone to know about the fundamentals of share market, some may feel it to be unimportant.
In the simplest possible definition, a stock market is a place where you can make investments with companies and have a share of their business. There are risks, profits and losses involved due to the fluctuating stock prices. Despite that, not always can you receive guaranteed profit when you invest in the stock market and not always will you be at a loss with your investment.
The reasons why one should be aware of the fundamentals of share market are several. Here is a quick discourse on a few of them.
You receive a profit on your investment
When you invest your money in the stock market, there are chances of receiving profits sooner or later. Stock market increases in value with each passing day but the shares are known to fluctuate depending on the market trends. The fundamentals of share market state that when you invest in a reputed company that can grow in terms of profit-making, you are in for profits. You can also invest in multiple companies so that there is a balance in the profits and not lose out on the money when the shares of a mid-range company fall.
You receive dividends
There are a few stocks that are known to help their owners with dividends which are mentioned at the time of investment or purchase. This is a sum of money that you receive annually that is a portion of the profit that the company receives. Even if the stocks have witnessed a loss, the amount is credited to your bank account. The fundamentals of share market state that this dividend can be reinvested somewhere else or can even fund you during retirement.
You get part ownership of the company
When you buy a share of a given company, you get to be a part owner. That means, you get a chance to provide inputs during business decisions and may also have to vote during certain cases. When you are a shareholder, you receive annual reports that you can have a look at to know what is the condition of the business. This would also allow you to analyze whether you should be re-investing in their shares for the next financial year or not.
You can buy or sell the shares at any time
The fundamentals of share market say If you have plans in buying shares belonging to a company, you can buy it whenever you wish to. You do not have to get hold of brokers or agents. The same goes for selling it as well. You do not have to worry about looking for a buyer, and things are liquidized automatically.
While stock markets are always one of the choices made by people who make smart investments, it is always important to check market risks and be aware of what could follow. All of this makes investment easy.