What Is Equity?
When you buy ownership of anything that what we called equity. Let’s understand this with a simple example: – Let’s suppose you buy 50 shares of any company and that company have total 100 shares in market, then you become owner of 50% of that company. Now if that company makes profit in the market then your profit will also go UP or vice-versa.
What Is Equity Investment?
It is a simple theory that when you buy or hold a share of a company for a long or short period that what we call equity investment. It can be done either by you or by SEBI registered investment advisor.
From this you are the owner of percentage of share you buy of that company. From this you have voting rights in company decisions. Your profit and loss are dependable on company’s performance. You will get capital appreciation or dividend depends on company’s profit or vice-versa.
Advantages Of Equity Investment
- Liquidity: – The shares you buy, sell or hold in the market for a long or short term of period are highly liquid. It can be redeemable anytime according to your needs and wants.
- Professional advisors: – For investment in equity you can hire SEBI registered investment advisor. Who can advise you where to invest, when to invest and how much to invest to lower your risk and monitor market trends and every company in your portfolio for the better result and can give better returns to the investors.
- Exercise control: – After buying the share of the company you get the voting right in the company. That involves you in decision making meeting of a company because now you are the shareholder of that company.
- Bonus share: – Sometimes on special occasion company decide to issue bonus share for their existing shareholders which is free. This involves the huge profits for the existing shareholders as they have the right to sell that share whenever they want to.
- Limited liability: – When you buy shares of a particular company your only loss is limited the amount of that share you bought if company is in loss not more than that.
- Diversify: – An equity share also offer diversifies to the investor at a minimal amount. So that they get a good exposure in market and because of that they don’t have to incure much loss when market is down.
- Increase in investment: – Right investment in shares also helps you to increase in the principle amount you invested in the form of capital gain or dividend. These two are the ways which gives you the good exposure for your investment.
- Tax benefits: – One of the best tax saving scheme for equity investment is ELSS (Equity linked saving scheme) which can save tax up to the investment of 1.50 lakh from their taxable income which will eventually reduce your tax liability and it has shortest lock-in period of 3 years among all other tax saving schemes.
Take this safety majors before investing in equity market
- Always do research before investment in stock market.
- Investment advisor like Brighter mind equity advisor helps you to advise related to stock and help you to build and maintain investment portfolio.
- Always check all the statements like income statements, balance sheet and cash flow statement of a company before investment.
- Keep track of all your investment and portfolio on a regular basis and remember don’t put all eggs in one basket.
- Market always trumble and on the basis of that buy/sell shares.