Why One Must Invest in Equities

In the context of share markets, an equity can be defined as shares owned by a company. Equity trading involves risk, but it also has a better rate of returns than fixed deposits or savings accounts. If your investment plan involves investing for a long period, then you should start investing in the equity market. It requires low investment, so it is not necessary for you to invest all your money in equities. It is easy to buy, sell or convert your equity into cash when you feel necessary. Equities offer you a high rate of liquidity.

Once you are an equity investor, you own a part of a company. This, in turn, helps you benefit from the growth opportunities which your company explores. It is of prime importance that you choose the right company. Equity market investments give you the best chances to hedge inflation. You can also maximize profits by equity trading in the options market, specifically using equity derivatives. More so, online equity trading has made it easier for you to understand and become an equity trader.

Top Equity Trading Jargons To Know

  • Assets- Assets are everything that a company owns, which adds value to the company and shows its total wealth.
  • Bear Market- When stock prices fall consistently, then it is called a bear market.
  • Bull Market- When stock prices increase consistently, then it is called a bull market.
  • Bid- A bid is a price which a buyer is willing to pay for a stock. This price forms the basis of a stock quote.
  • Blue Chip Stock- A blue chip stock is a stock of a leading, nationally known company. These are the companies who have a continuous record of steady dividend payments.
  • Dividends- Dividends are a periodical share from the company’s profits distributed to its shareholders. Not every company will give you dividends.
  • Liquidity- Liquidity is when you can either buy or sell a stock and turn it into cash easily.
  • Initial Public Offering (IPO) – IPO is when a company goes public and offers shares for the first time.
  • Index- an index is a measure of the stock market. It is based on the performance of the stocks.

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