A Primer on Investments in Share Market

The stock market is a trading platform that brings together buyers and sellers who trade publicly listed shares, during specific hours of the day. A multitude of companies, belonging to various categories and sectors, are listed on the stock market, and the investor must decide which companies to invest in, based on their risk appetite, return requirements, financial goals,and time horizon. For instance, Ankit plans to invest for the long term, and, since he is in his 20s, he can take on high risks. Therefore, small-cap companies with a strong management structure and robust potential for returns can be one of the segments he invests in. Separately, since every portfolio requires a minimal amount of security, at the very least, Ankit’s investments in the share market should also include safe large capitalization companies which have been known to offer stable returns.

Investments in the share market offer individuals several benefits, from the opportunity to participate in the growth of the economy as well as the companies to the possibility of earning a regular dividend income. A stock market is also a great place for liquid investments, and you can easily invest or sell your shares, as long as you select stocks that are traded in high volumes. As a part of your portfolio, investments in the share market will also allow you the advantage of diversification, which involves distributing your money into different asset categories, for risk mitigation and return accrual. When you invest wisely, your share market investments can offer your portfolio the firepower necessary to offer you robust returns.  

While there are many benefits to investments in the share market, you should be aware of several risks. One of the biggest risks of investing in the market is the potential for real and heavy losses – if you end up investing your money in bad quality stock, there is no estimating the amount of loss you will sustain. Further, since risk and reward have a directly proportional relationship, the higher the probability of reward, the higher the underlying risk. This is why investors are advised to allocate only a portion of their corpus to the share market, rather than investing the whole amount. The market is volatile, and there is no way of ensuring an absolute lack of risk. 

Risk Mitigation in Share Market

Ankit had heard of many people who ended up making major losses in the share market, and this was one concerning issue. While he did want to earn good returns and create a nest egg for himself, he was worried about losing everything he had saved, along with the money his father had gifted him. Add to it the fact that he did not have much knowledge of the market, and Ankit was confused about how to proceed with his investments in the share market. That is when a friend suggested that he try out trading apps and curated portfolios wherein he would receive a portfolio suggestion based on his profile. Given the expert advice available, as well as the ability to undertake investments without worrying about his faulty judgment, Ankit found that this option worked the best. If you are also new to the market and want to start your investing journey, you should opt for trading apps and curated portfolios which will help you along the way and pave your path to success.