Equity / Stock Investments

Equity is the ownership in any asset after all debts have been paid off. For example, a car with no outstanding debt is the owner's equity. Similarly, stocks are equity because they represent ownership in a company.

Investments in Equity generally refer to the buying and holding of shares of stock, expecting wealth creation as the value of the stock rises. It might also refer to the participation of ownership (partial or whole) in a private company or a startup. Investment in new companies is referred to as Venture Capital Investing and generally has a higher level of risk attached to it.

Investors benefit by way of dividend payments or by selling the stocks at a rate higher than its purchase price. The dividend received on equity investment is tax free for the investor, although companies are required to pay a dividend distribution tax on the dividends paid out to shareholders. Past trends show that investments in equities have yielded better results than other forms of investments. However, there is no guarantee that this trend will continue in the future as well.

Investing in equities also come with their own share of risks. Stock markets can be volatile and are prone to fluctuations and so is the performance of the company. Other external factors such as policy changes, workers’ strikes, obsolete technology, etc. could also influence the share prices. Operating in a dynamic market, it is important to always monitor your investments and alter them if the situation demands. Investors need to assess their level of risk tolerance before investing. The rewards of bearing this risk could be manifold, so investment planning is essential.

In equity trading, evaluate the company you are investing in. Compare them with other companies in the same sector on parameters of growth, market share, management and value. It should be managed professionally, be financially stable and have sound corporate governance practices.

To know more about investing with us, visit Broking & Distribution or Corporate Advisory

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