What Are The Main Advantages Of Investing In Equity?
When investing in equity it is important to be aware of the risk involved in your investment. Equity share is a class of asset that provides great potential in increasing the amount of return. However, the investor must be ready to take on the necessary risk which can range from moderate to high. There are various types of equity investments for investors to choose from.
Along with the risk that is involved in investment, there are other factors that discourage people from making any sort of investment in the stock market. It is always advisable to study the market precisely before taking any decision regarding any sort of investment.
Benefits of Investing In Equity
Both amateurs and experienced investors have received significant profits with due financial plans especially in the equity shares. There are various avenues that are available to any investor to invest in inequity like tax saving equity that is linked with the saving schemes, mutual funds, or can invest directly in stocks. India has witnessed an increasing interest of the investors in investing in equity. So why is everyone choosing equity in the present times? Let us have a look at the benefits of equity investment in India.
There are many equity investment companies as well. Now you may wonder what an equity investment company is? A private or a normal equity firm refers to an investment company that uses its own capital or funds from other investors for the purpose of startup operations or expansion.
Ownership
Investing in the shares of any entity makes you the investor a shareholder of the company. In other words, the investors get ownership of the organization and can exercise their control. As an investor, he or she would enjoy a share of the income that is being earned by the company. Along with that, the investor would also get voting rights in the decision making system of the company.
Higher Returns
The primary benefit of investing in equity is that it can offer high returns in a very short span of time compared to other options of investment like Bank FDs. Currently, the equity investment space is attaining all-time highs as it gets back from the Covid-19 setback of 2020. With relevant stock picks and a solid strategy for trading, the stock market can potentially offer the investors with unparalleled returns moving ahead.
Limited Liability
There always prevails a risk of adversity when it appears to companies such as bankruptcy or functional losses. However, the investors’ liability as an investor or shareholder is confined to the amount of investment the investor made, and not a penny extra.
Liquidity
Stocks are mainly considered as liquid assets. The shares can very easily change ownership. The average regular volume of transactions on BSE and NSE is considerably high. This implies several sellers and buyers are taking part in the market at any specific point of the day.
Protection by SEBI
In India, the stock market is controlled by the SEBI (Securities and Exchange Board of India). Amongst other operations, the regulatory framework that has been designed by SEBI is liable for the protection of the rights of the investors. SEBI has been an important instrument in decreasing the happening of fraudulent activities by entities or individuals.
Flexibility
An investor who is aiming to make an entry into the stock market arena can initiate with a rather small investment. Buying the stock of mid-cap or small-cap organizations in smaller units would be the best way forward. Another great advantage of investing in equity is that the investor can purchase, sell or hold shares whenever and for how long they prefer.
Conclusion
The benefits of investing in equity and also in equity funds are clear. Undoubtedly, Equity has a great power to generate high returns. However, the investor must invest wisely– be driven by figures and not by emotions. Minimizing the risks and earning the estimated return is the only long-term game.
