Share Market Made Simpler

What is a Share?
A very simple question for those who are already into shares. But, for those who are new to Shares, the following text will help you to understand.

Difference between Share and Stock:
The term of share and stock means the same thing, of this stock is a common usage in America for shares. In India we term this as shares.

What is a Share Certificate?
Share is the proof of ownership in a company. The physical proof of this ownership is a record called a share certificate. Today, shares are kept in electronic format or it is also termed as dematerialized format. You can still hold a share in a paper format, if you want.
This document is a proof of your share in the company. Your ownership in the company is in proportion to the number of shares you hold. In short, you are buying a partial ownership of the company.

A Simple Example :
Suppose a company issues 100 shares. Out of 100 issued shares, you are buying 10 shares of the company. Now you own 10 percentage of the company.

What is Face Value (par Value) of Share?
All companies issue shares with a fixed denomination called the face value (or par value) of the share. This face value be indicated on the share certificate. Generally Indian shares has a face value of Rs. 10/-.

Difference between Face Value and Market value:
A face value has no relation with the market value of the share. Market value of the share will always change depending upon the market conditions. But the face value is a fixed value of the share as per the books of the company.

Split the face value of the share:
A Face value or par value of the company share always remains the same, irrespective of the market price of that share. Companies have to right to split the face value of the share to Rs. 5, 2 or 1 to bring more volatility to the share.


Risk of Investment in Shares:
Make money with Share Trading:
As everyone know, every money making avenues has its own risks involved like in investments. The knack of investing is by knowing which risks are worth taking, and which should be avoided.

Understanding and analyzing:
Understanding and analyzing the risks to take is the soul of good investing and the becomes your basis of getting good returns from your investments. This cannot be done without thorough research and analysis.

Share Trading is not Gambling:
Take the right decision by yourself. Do not let other factors bother you from your investment policies. Investing without adequate research is like gambling. By gambling on your investments you are not protecting your investments and may incur heavy losses.

How to become successful in Share Trading?
To be a successful investor by trading in shares there are definite steps to take. Following texts can help you to succeed in stock markets..

• Look for company financial data
  Before investing in company shares on the stock market, you should be aware that all publicly traded companies must provide access to investors with company financial data. The data is generally available from the company so if you are considering buying shares from a company, then get access to this financial information and make happy yourself that the company is in a good financial state before owning the shares of the company with your money.
• Key aspects to Look in a Company’s Financial information
  While researching the details of a company, then take a look at its financial position of atleast two to three years into the past. There is no need to go back further than this but if you go back less, there may be significant trends in the finances that you will fail to spot. Take exceptional note of the quarterly statements and the revenue and earnings per share of the company.
• Figures tell the Story of a Company
  Try to identify trends in the figures. While there is no guarantee of what might happen In the future of the figures, it is unquestionable that an upward trend in revenue and profits will be a positive sign to look out for. In simple words, a company having steady growth for past 2 to 3 years should have a positive growth in the future, until or unless some major changes occur.
  After you are satisfied with the financials of the company and that the projection of making good profits into the future are favourable you will be in a situation to consider putting money into the share.
• What Kind of Shares will give more returns? (Growth or Dividend)
  It is an continuing debate over whether it's preferable to buy shares that will grow in value, or shares that pay good dividends. The answer to this question should always lie with the individual investor. It is always suggested to avoid chasing dividends. We refer to the practice of certain investors of buying a share just before a dividend is expected to be announced. Please note that the price of the share will already have taken the dividend into account so you will be paying for it in any case.