The share market is one of the oldest and most popular avenues of investment. Lot of investors depend on the share market either for their primary or secondary source of income. It is one of the crucial elements of a free market economy.
There are a lot of advantages of trading in shares and some of them are:
- High return on investment: Share trading offers a much higher return on investment, in comparison to various other investment opportunities like fixed deposits and bonds. Through share trade, the investors can make great profits on their investment in just a short span of time. Moreover while the share market keeps fluctuating from time to time, the value of a good stock invariably rises over a significant period of time. Therefore, by investing in a trustworthy stock, an investor can ensure stable and profitable returns from it.
- Diversification: An investor can diversify their portfolio by investing in various stocks, and earn a substantial income through multiple independent income sources. The stocks of varied companies mostly perform independently, and therefore even if the value of one stock goes down the investor can get stable income from other shares.
- Dividend income: Many stocks provide an income to the investors in the form of regular dividends. The investor can get the assurance of regular income through these dividends, without making any additional investments.
- Ownership: The share of a company essentially means a part of its ownership. By buying a significant number of shares of a company, an investor gets to enjoy the benefits of being a business partner. Moreover, the biggest shareholders of a company have the authority to be a part of its corporate board meetings and may also have the voting rights in passing major business decisions. These shareholders also receive the annual reports of the company they hold shares in.
- Profits from home: With the advent of online share trading, the investors can engage in share trade while sitting at their home. Those involved in share trading may not even need to engage in any other profession if they can make profits from the share market itself.
- No cap on investment: There is no bar on the amount an investor can invest in share trade. With online trading investors are free to decide on the amount they want to trade in without any pressure from stock brokers.
- Regulatory Environment and Framework: The Indian stock market is regulated and managed by the Stock Exchange Board of India or SEBI. SEBI is responsible for regulating the stock market and protecting the investor rights. SEBI safeguards the investors from any fraudulent activities that financial agencies may be engaged in. The interests of investors are well protected by the SEBI framework.
While there are several advantages of engaging in share trading, the risks involved are also quite substantial. An investor, who does not have a good knowledge about the share market and its fluctuating conditions, might suffer significant losses due to a sudden drop in share valuation if he/she does not invest carefully or keep a close watch on the market. Therefore, it is always advisable that people willing to invest in stocks first read up all about the nuances of the trade and then start by investing small amounts first.
Moreover, there are various renowned online share trading companies in India that provide brokerage services to the investors. These online portals provide the investors with various hi-tech tools such as analytical graphs and customized formula in market watch, which helps them to make accurate trading choices.
Therefore, be it first time investors or those with experience in the trade, online share broking sites can be of immense help to traders willing to earn good profits from trading in shares.