Stocks and Shares

     What is a stock / share ?

A share is a share in the share capital of the company. A shareholder is a part owner of the company, there fore has voting rights. He is entitled to a share of the profits of the company after all the other claim holders including the tax authorities have been paid off. The Profit After tax belongs to the equity share holder – after the preference shareholder has been paid his dividend.

    Why should I invest in stock market?

As an investor what we look for is a REAL RETURN. Real return means actual return MINUS  inflation. Debt, commodities, etc. give you negative returns, and equities give you POSITIVE returns. You need a nice big number compounding well if you have hopes of retiring whenever you want to retire. Such returns, though volatile, are  necessary for you to build a retirement corpus.

    How to invest in shares /  stocks?

You need to first have a demat account. Once you have a demat account you can go to a broker / banker who will open a trading account and a demat account for you.

 

    How to select a stock for investment?

    When should I start investing in stocks?

    What are the types of shares in India?

    What are the risks involved in investing in stock market?

    What is a time horizon for investing in stock market?

 

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  1. Sir,

    You said, “He (shareholder) is entitled to a share of the profits of the company after all the other claim holders including the tax authorities have been paid off”.
    But some stocks do not pay dividend but invest the cash for further growth (growth stocks) or keep cash with themselves for future acquisitions (e.g., Infosys).

    My question is “Is it not compulsory for the companies to share profits with the shareholders?”

  2. wow.. I was expecting such an article for a long time.. gud going… expect this article to continue in series

  3. I have a couple of basic questions about stocks. Could someone clarify please?

    1. Are stocks finite in quantity?
    For example, can I buy stocks of a company even though there are no sellers for it in the market?

    2. The second question is in reverse. Can I sell a stock of a company in the market even though there are no buyers for that company at that time?

    Thanks,
    Ashok

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