0This is for all the learners who think of capital markets beyond 'shares','intra-day', 'fast money making','risk','mutual funds'..and so on.
This is also for the low risk appetitte people who are away from the markets, but still are very much linked to it, let me help you know how?
Ultimately,this is for everyone who are keen to understand the finance jargons, thus for those, who want to invest their hard earned money with all the understanding!!Lets start with a very common term Investment.
We save money, we save it to be used for our goals,emergency and then retirement. But do we let our money lie idle in our homes as cash? We want out money too to work for us, hence we go for deposits, traditional FDs, Gold, Land or real-estate.
Meaning, we make our money work such that it grows with time. We are trying to cope up with "Inflation". Simply speaking, a toffee which costs Rs 5/- today would be costing Rs 20/- after 20 years.We are trying our 5 turns 20 after 20 years, compounding magic isnt it? And when few of us beleive, share market would help me cope inflation in better way, there rises the simple yet very complex world of Capital Markets.
Similar to us who want to invest, there is a business class who wants money, capital to raise their business. They knock the door of "Exchange" to provide medium to raise capital. Thus, exchange in simple terms is the entity who exchanges the financial instrument for money.
Listing on exchange is not a simple process, you need:
- To build trust among investors,provide facts with better track record.
- Pass the "Regulatory" tests, yes watchdogs exist so that no one runs away with your money.
- Follow the protocols, rules and regulations of exchange.
With the great hustle , company initially enters into to "Primary" market through "IPO" - Initial PUblic Offering.
When we trade the shares for that matter on exchange, it is called "Secondary" market.
Thus, as a investor, you buy a potential "share" ie "A Equity" with the hopes of high returns.Company owes you and has to share their profits in form of "Bonus/Dividends". Technically you become the shareholder of that company. Next time you buy a single share, remember you "share" the ownership of the company, have voting rights and are liable to bare losses and enjoy profits!
Thus this is the huge world with lot many financial instruments.We have bonds,mutual funds,derivatives (altogether a different segment) and so on.
Welcome to the world which not only makes money but does it with discipline, smartness and with set of golden rules.
And to conclude, how do the people who dont invest are still investing indirectly? So you have a golden retirement source called PFs? If yes part of your PF money is invested here very very cautiously for you to get the guarateed returns!
Lets learn more, lets spread awareness! Happy learning!, till my next post. Please feel free to share the reviews, critics welcomed!
