- Bonds and stocks raise a ton of questions and doubts. Piling up this heap of questions are: is it safe to invest in a stock market? If so, what kind of stocks should I keep myself aware of? Why is there fear and stigma around stock and stock markets? Did you hear about that stock news yesterday? Questions would seem endless, but with your crystal understanding of the fundamentals of the stock market, things will set easy down your stock journey.
Here are a few key questions that are ought to bring lucidity to your understanding of stocks and bonds.
What is the difference between a stock and a bond?
Stocks- When you buy a stock of a company you are practically purchasing a small wafer of that company. In doing so over the years, your stocks pile up and you keep growing as the owner of the company. As the company progresses well, their worth increases and so does the monetary value of your stocks! Now you can sell your stocks at a profit. Two poles have kept the balance peaceful in the ever-lasting history. Likewise, losses incurred by the company reflect as a price cut in your stocks.
Bonds- When you purchase a bond you are actually lending money to a company or government body. This benefits you because you keep getting your monthly interest on the principal amount as your extra income source. Later after a set period of time, you receive your principal amount too. Remember that bonds do provide more assurance on security but again it is also affected by the performance of the company.
Are stocks a safe investment?
There has been fear and stigma developed over the years when the stock market came into the picture as an investment channel. Every day you as an investor come across stock news and trends that leave you bewildered. But are stocks really safe? We tend to lean more towards physical assets than financial assets. There are certain risks associated with stocks and bonds but if you do your research well before investing you are welcoming yourself a bunch of benefits with very little to no risk in hand.
How are share markets in India different from stock markets?
A share refers to your purchased slices of a particular company while a stock refers to a sum of all your purchased shares in multiple companies accumulated together.
A share market is a place where you publicly trade shares for profit/loss. While a stock market is a place where you trade in varied financial products like bonds, mutual funds, and also derivatives.
To sum up, stocks and shares are safe. Do your right research and seek expert advice to invest in the right ventures at the right time. Bear in mind to incur a minimum loss, keep investing in smaller amounts and multiple ventures and stocks. Lastly, enjoy the thrilling journey of stocks and shares markets in India.