You're probably wondering right now, “What are equity shares? What is the meaning of equity shares? Equity shares definition: Investing in equity shares is one of the most common ways to earn a high profit in the stock market. Many investors hope that equity shares will provide them with a high return as they have historically done. The Nifty 50 Index, India's benchmark index, delivered an annual compound growth rate of 8.81% in the decade between 2011 and 2020. In other words, a person who invested INR 5,000 in the Nifty 50 in 2011 would have made INR 11 630 in 2020.
BSE Sensex Index has grown at a compound annual growth rate of 11.12% since 2011. An investor would have received INR 14,350 in 2020 if they invested INR 5,000 in BSE Sensex in 2011.
To understand equity shares meaning well, you must understand what are equity shares along with the classification of shares depending on the followings:
To invest in the stock market, you'll need three accounts:
Stocks are purchasable through two primary sources:
In addition to providing certain benefits, equity shares also offer the following:
When you invest in equity shares, you have two earning options:
If you keep your fund in a savings account, you might not beat inflation rates at all times. Therefore, many investors choose financial instruments that yield a greater return, such as equity shares, so that they maintain the purchasing power of their funds.
The current inflation rate in India is around 4 percent. It means a product purchased today will be worth INR 104 next year. Or, the price of a product will double in 10 years.
To maximize your returns on savings, you must invest them in generating returns that exceed the inflation rate.
Investing is all about selecting and acquiring assets that can generate profit. The different investment options get categorized into asset classes such as equity, bonds, real estate, and commodities.
In other words, it is prudent to invest in different asset classes so that negative performance in one will not impact your total returns. Even if the interest rate on fixed deposits drops, but the value of stocks you own rises, you can still generate a reasonable income. You can reduce risk and gain steady returns by investing in multiple asset classes through diversification.
Before you trade and invest in the stock market, you must know the meaning of equity shares. Hope this article helps you understand different aspects of equity shares, and equity shares means.
An equity share is a type of share that an investor receives as part of their investment, which allows them to vote, share profits, and claim assets.
The equity shares issued by joint-stock companies are the primary source of long-term financing. Equity shares are not redeemable, so it is called long-term financing.
Equity shares are unit ownership of a company. The types of equity are small cap equity, large cap equity and mid-cap equity.
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