Equity Shares

Both public and private corporations issue equity shares. Equity shareholders are the owners of a company and initially provide the equity capital to start the business.

Preference Share

A preference share is a type of share capital that generally enables shareholders to fixed dividends ahead of the company`s common shares and to a stated rupee value per share in the event of liquidation. As preferred shares have characteristics of both debt and equity, they provide a link between the bond and common equity sections of a portfolio. Voting rights are usually assigned to preferred shareholders

Fundamental Investing & Speculation

Equity give you two kind of return, one is speculative and another is fundamental growth. 95% of the investors in shares are here for speculative gain, that is gain from the short term price movement of shares. They start TIMING THE MARKET rather giving TIME IN THE MARKET. This approach for short term gains is the real cause of loss. Investment for long run is not only rewarding but also beats inflation by a good margin and creates wealth. Now think of Indian business or Indian Economy for next month, you will be clueless but think of it for next 5 years, 10 years. We know that you are aware of the answer.

Risk Involvement

Now people call equity risky. Unfortunately risk is not understood by many investors. In short run, risk is in volatility of price of underlying asset i.e., how much it can rise and fall given a period of time. But in long run risk is not volatility but the risk is to maintain the purchasing power of your money.

Returns

Stocks can help you build long-term growth into your overall financial plan. Over a longer period of time, shares can produce significant capital gains through price appreciation. Some companies also issue free or bonus shares to their shareholders as another way of passing on company profits or increases in their net worth. Stocks, as an asset class, have outperformed most other type of investments over longer periods of time.

In addition, stocks pay dividend income, which has the potential to grow overtime. Shares that pay regular dividends are called income stocks. These companies have capital appreciation potential and when dividends are reinvested into additional shares, there is also the potential to compound investment returns.