Understanding the Share Market
A Beginner's Guide to Stocks and Mutual Funds
1. The Share Market
The share market is a digital marketplace where ownership of public companies is traded. It allows businesses to raise capital and allows investors to participate in a company's growth.
- Primary Market (IPO): Where companies sell shares for the first time.
- Secondary Market: Where investors trade shares with each other (Stock Exchanges).
2. What are Stocks?
Buying a stock means buying a piece of a specific company.
If the company earns a profit or grows in value, your share price increases. You may also receive a share of the profit called a Dividend.
3. Mutual Funds
A Mutual Fund is a pool of money from many investors used to buy a diversified basket of stocks and bonds.
It is managed by a professional Fund Manager, making it ideal for those who don't have time to research individual companies.
Comparison Table
| Feature | Stocks | Mutual Funds |
|---|---|---|
| Management | Self-managed | Professional Manager |
| Risk Level | High (Concentrated) | Moderate (Diversified) |
| Control | Total control over picks | No control over individual stocks |
| Best For | Active Investors | Passive/Long-term Investors |
How to Start
To begin investing, you need three connected accounts:
- Bank Account: For transferring funds.
- Demat Account: To hold your shares/units digitally.
- Trading Account: To place your buy and sell orders.
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