SHARES

A unit of ownership that represents an equal fraction of a company's resources. It entitles its holder (the shareholder) to an equal right for the company's profits and an equal responsibility for the company's debts and losses. Two major types of shares are:

Shares: Direct investment in stock market has become lot easier. SEBI Securities and Exchange Board of India has taken very good steps in last to decades to revamp the nature and operation of stock market. There are two main exchange, NSE National Stock Exchange and BSE Bombay Stock Exchange they declare everyday the index statues of selected company shares through NIFTY (50 leading shares of NSE) and SENSEX (30 leading shares of BSE). There are stringent criteria for selection of these shares. The new investor can restrict there investment to these shares, the total number is not 80 (50+30) but only 50, since all SENSEX scrips are part of NIFTY. Now, online trading, demat and other reforms have given following distinct and direct advantage to common investor.

Market Lot: The removal of cap of "Market Lot" (minimum number of shares to be traded ) has helped common main with lesser funds to enter into stock market with limited funds and able to buy lesser quantity of big value shares.

Trading: In online trading, you know the price of share at which you has purchased or sold, in earlier days the investor was charged days high value for purchase and lower value for sale (rest was being earned by broker).

Delivery: The demat form of shares have removed lot of hassles in delivery of shares. Now, your demat account gets credited or debited very next day. In earlier days one has to wait for more than one month to get physical delivery of the shares purchased & then hassles/expenses for sending the shares to company for transfer.

Settlement: Now your bank account gets credited or debited for sales/ purchase done by you very next day of the transaction. Earlier brokers used to ask money immediately for the purchase made and used to pay you after a gap of about one month for sale you had ordered.In spite of all these advantage the ups and down of the market may impact the new investor particularly in advanced age (retiring investors putting there life time savings) hence they are advised that they may put a small amount say 10% on the stock market, gain expertise and than on maturity of other investment can divert the funds to stock market. For younger generation it is advisable to start investing in stock market at younger age so that you will learn that in long run this investment is must attractive and inflation proof.

Commodity Market: Then years ago this term was unheard of but now it is reality and you can invest in various commodities like Metals (Gold, Silver, Copper etc.) or various basic commodities like wait, Sugar, pulses etc. In this market an investor is supposed to buy or sell a market lot for a future date say a product 100 Gms of gold of 31.07.11 will be available for trade from three month before that date or 01.05.11. Investor it not supposed to put all the money for 100 gms but a small margin of 1 to 5% only. However, on every day end your account gets debited or credited by the amount of loss or gain value of entire market lot on end of day quotation and everyday your account is marked to market. On maturity an investor is supposed to take/give delivery of that 100 gms gold or of course he can square of the transaction before that day. Thus investment avenue is of short term nature and an in-depth knowledge of market movement of prices in that commodity would be an added advantage. Here also online trading platform are available and advantage of trading from home are possible are possible. The market timing are also quite suitable for working people, the market starts in afternoon 3 to 4 pm and continue till 10 or 11 pm in night. The risk in this market is maximum and small investors better keep away from this market.

• Ordinary shares
• Preference shares

ORDINARY SHARES(common stock):which entitle the shareholder to share in the earnings of the company as and when they occur, and to vote at the company's annual general meetings and other official meetings.

PREFERENCE SHARES(preferred stock):which entitle the shareholder to a fixed periodic income .Shares (also known as "equities" or "stocks") represent ownership in a company. When you buy a share, you become a part owner in the company and become entitled to share in its future value and profits.

Shares offer growth to investors in two key ways:

• Companies can also elect to pay part of their profits to shareholders as an income payment, instead of reinvesting all profits back into the company. These income payments are termed as "dividends".
• As the overall value of the company increases, the value of your shares also increases

As shares are simply little parcels of companies, they have the potential to generate very high investment returns. However, they also have the potential to fall in price if the company's performance falters.One of the major advantages of dividends is that they can be very tax effective. If you invest in an Australian company that has already paid tax on its profits, tax credits (known as franking credits) may be attached to the dividends the company pays to you. These franking credits can be used to compensate tax payable by you, on other income.Shares are generally best suited to investors who have a longer investment time period of 5 to 7 years and more.And are comfortable with some volatility in their investment value over the short-term, in exchange for higher returns over the long-term.

Developed By Nidhi Tripathi