The capital of any company is split into shares. Every share goes on to stand for a unit of ownership. Mostly once an organization needs fund for their expansion they raise funds. The companies are known to benefit from this exercise as they do have the required funds to suffice their requirements.
Now let us get to the reasons on why people end up investing in stocks. For more information check Best discount broker in India
Wealth creation
The essence of share market investing is to generate wealth. One of the effective tips that traders go on to follow are buying low and sell high. Another objective of wealth creation is to stay invested for a long period of time. The reason being every business goes through a cycle and investors have to provide ample amount of time for the shares to generate wealth. This is achievable if you are focussed and stay invested for a long period of time.
An opportunity to be part of a company
The moment you buy shares of a company you go on to become a part of the company. In the process you go on to earn profits that the company enjoys. The ownership of the company depends upon the volume of shares you hold. Being a partial owner of the company you are informed about the company news along with updates.
Diversifying your portfolio
If you are investing in shares it diversifies your investment portfolio. By this diversification you can generate potential sources of income. For example income from bonds, fixed deposits could work out to be the chief source of income.
Trimming down loss
In an Indian share market there are a host of companies. This enables investors so that they are able to distribute all investments rather than committing resource into a single channel. Suppose if the loss of a company leads to a fall in the value of the shares, the success of others would help to trim down the loss.
Money becomes easily accessible
Any money that you put into investments like a fixed deposit cannot be claimed till the full maturity. On the other hand when you are buying or selling shares you can do it without any time frame. The amount that arises from the transaction can be directly transferred on to the bank accounts.
Dealing with risks
The main fear when you are trading in a share market is anticipated losses. This feature can be overcome with the system of stop loss that provides a mandate to the broker about an intended price limit. If the value of the shares fall below this limit it would be sold automatically and prevents you from incurring major losses.
Last but not the least you can cash in the benefits of dividends. This is a share of the total profit that is passed on to the clients. The amount can be paid in the form of cash or given out as shares. Though it is not compulsory for a company to exercise any of the above options.