Share Market, Stock Market, Stock Investment
Shares are the number of units to denote the ownership of a company and are generally available for trading o a stock exchange. The continuous moving ticker that you see on your TV or computer screen are the prices at which these shares are available for buy and sale. When you buy shares of a company, you become owners of companies to the extent of face value of shares bought by you. Face value denotes the nominal value of these shares. Thus face value of shares may be dollar but it may be available in the market for trading at a much higher price depending upon its performance or future potential. However if you buy shares, you become entitled only to the extent of face value of shares and all corporate actions such as dividend, bonus, split etc. depends upon that. Thus the company may declare a dividend of 100%. However calculation of the same will be on face value and not the price paid by you to buy the security. In this case, for example, if you are holding 1 share, you will get 1$ by way of dividend.
Investment in shares of a company can be made in different ways. If you want to be initial investor, you can invest in the initial public offerings brought by the company when the company wants to raise finances and list its shares on stock exchanges. Shares may be listed on stock exchanges such as New York Stock Exchange or NASDAQ or other Over the Counter Stock exchanges. Alternatively a number of Alternate Trading Systems (ATS) are also formed by big stock exchanges which allow people to trade in a number of shares of companies.
Once listed on a stock exchanges, shares are available for trading on a stock exchange and you need to go to a stock broker for buying or selling shares. Your broker may also offer on line trading facility or you may simply call the broker to give your orders for execution. Your broker will charge a commission for executing your orders and you will get delivery of shares or proceeds of your sale through such broker.
Investment in shares yields benefits such as dividend and appreciation in capital value of your investment. Dividend is declared by the management depending upon the financial performance of the company and its share price is a factor of demand and supply. Thus a higher demand for shares of a company would push up the market price and vice versa. Again demand and supply are factors dependant upon the past and the expected performance of the company and may push up or push down the share price.
Volatility in share prices may seem to be dampener for a large number of investors. However if you pick up right stocks at the right time, you can make money out of your investment. It is not so simple but not too difficult too provided you are disciplined in your approach.
