How you should invest in Equities?

Today a million dollar question in almost everybody’s mind is that how one can grow his or her money and become rich in just a short period of time. Actually this is not impossible but certainly it is also not that easy. One has to realize the fact that growing your money quickly and becoming rich involves and requires some really smart investment decisions on your part. It is nothing magical but purely mathematical.

Investing in Equities – Adopting the Right Way for Making Profits

Yes you have to inculcate the discipline of investing rightly. And one of the smart ways of growing your money quickly is doing investment in equities. As there is a lot of confusion and myth associated with investing in equities and for this reason we have come up with the present post on how you should invest in equities which will cover the ifs and buts, whys and how of investment in equities.

Meaning Of the term “Equities”

Firstly we begin by describing what we really mean when we talk about “Equities”. There are a lot of people who do not have a clarity regarding “Equities” and for the same reason either they do not invest in equities or if they do, they do it wrongly.

Actually equities are nothing but stocks issued by companies. The stocks of a company are issued in the form of many small shares. These shares can be bought by the general public.

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Other Fundamentals relating the working of Equities

There can be millions of shares of a company. When a company issues shares to the public for the first time it is referred to as IPO (Initial Public Offering). One can apply for as many shares he or she wants to buy but finally it depends upon the discretion of the issuing company as to how many shares it issues to a person in general.

A company brings out shares as a method to raise money. It can either utilize it for further growing the company or to meet out its expenditures. If the company performs well or is expected to do well, the price of the shares of the company will rise, the value of the share will move up. If the company suffers losses or is expected to fall, then the prices of the shares fall.

Buying and Selling of Equities

So you have to first buy a share and then finally you have to sell the share. The difference in the buying and selling price of the share is your “margin” or your profit in the whole transaction. If there are any other fees associated with the transaction, then you have to subtract it from the profit to derive your actual profit.

The Goal is to increase your Profit Margins in Equity related transactions

The whole goal centers around on how you can increase your margin or profit in the transactions involving buying and selling of shares. People invest in shares with the sole purpose of booking huge margins. But as we have already pointed out, it is not so easy and requires some skills of investment in equities. The risk is also huge. You can also loose on your transactions if you do not take right kind of decisions. Thus there are few things you should always remember when dealing with shares if you want to make good amount of money through Equities.

How you can invest profitably in Equities

Technique No. 1: Avoid Day Trading Be an Investor

One of the primary disciplines required in investment in Equities is that you should never fall prey to day trading. Avoid day trading and become an investor in equities. In day trading although you trade shares on daily basis but actually never release big profit margins. You really never invest but actually trade for small margins on whole lot of shares that you decide to buy and sell on a particular day. Plus there are chances that you finally end up facing losses.

Technique No. 2: Stay Invested for a Medium to Long term

Investing in Equities on the other hand for a medium to long period of three to ten or more years would definitely give you better to best returns when compared to rest of the options. As we analyze the world trends we come to the conclusion that long term investment in Equities has been profitable. It usually gives returns of more than 10 percent on an average. And that is what you were looking for. Growing your money and becoming rich. Yes staying invested for a long period is the right way of investing in equities.

Technique No. 3: Carefully choose your stocks

The third factor which can influence your margins is the type of stocks you buy. Companies of various industries and sectors and regions list their shares in the stock market. One must be ultra careful in choosing the stocks of companies which you want to keep in your portfolio. The past, present and future prospects of the company should be studied before deciding to put your money. This is the factor which can ultimately prove to be the reason for your making huge, average or low profits considering the same time period for each of the company’s stock.

Technique No. 4: Right Time of Investing

The fourth factor which influences your profit margins in investment is the time when you buy a particular set of stocks. The market conditions prevailing at that time and the performance of the company decide the share prices. In bearish market conditions when prices of shares are at their lowest, you should purchase the set of shares. So one should invest when market is at its low. Thus buying stocks when markets are low and selling them when the markets are high is the fundamental behind a successful and profitable investment in Equities. Also buying out shares at different time periods helps too. It reduces the risk of investing in Equities and thus averages out the rate of return when you finally sell them.

Conclusion

Thus we see that it is not impossible to become rich and you can certainly grow your money. Equities do provide you with a way of investing. It finally depends on how you invest in equities. You invariably have to learn the mathematics of rightly investing in Equities and inculcating the discipline of doing a proper research and analysis before putting your money on any company. We illustrated and described in detail the meaning of Equities, its purpose, usability, dealings and most importantly how you should invest in Equities so as to make healthy profit margins. You can surely use these tips to remove any type of myth you have about equities and can also use the tips before doing any kind of investment in equities.

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