Equity Trading

Usually, companies sell a portion of their ownership to the public in exchange for money. Investors purchase a share of the ownership by buying shares of the company. They then become a shareholder. Company stocks are called equities.

Equities are traded on the stock market. These could be in the primary or secondary market. In the primary market, companies get listed through an Initial Public Offering. Thus, new securities are available in the primary market. In the secondary market, investors buy or sell securities, which have already been issued. Currently, more than 1300 securities are available for equity trading on the National Stock Exchange (NSE) and over 6000 on Bombay Stock Exchange (BSE).

You need a demat account before you start to trade on India’s stock exchanges.

Equity trading is very simple. All you need to do is purchase shares of a company. To do so, you need a demat and an equity trading account. You will then have to link this trading account to your savings bank account to transfer money easily for the purchase of equities.

Simple saving money and keeping it aside does not help too.

Here’s why you should invest in the stock market:

• Beat inflation: People invest to beat inflation – the increase in prices of everyday goods and services. Because of inflation, you have to keep paying extra amounts of money to purchase the same quantity of goods. As a result, you feel the need to save more to meet future expenses. Hence, you invest. This increases the value of your money through timely returns. Equity trading is one of the best ways to beat inflation.
• Better than cash: Equity trading is one of the riskiest investments. As a result, many people are afraid of stock market investments. They fear that a fall in stock market might jeopardize their financial security. However, there is an element of risk in all investments. Simply holding cash in bank accounts or keeping money aside in lockers may be considered very safe, but its low returns do not help beat inflation. Equity scores over cash as an effective long-term investment.