If you have no idea what a share or stock market is, you have to start learning about it. You need to know about shares to invest in them.
What is a share market?
A share market is a place where you can buy or sell shares/stocks.
For example: let's assume John has a company, and he wants to expand his business to an extent, but for that, he will have to need capital to do so. So John will divide his company into small parts, and he will issue it on the stock exchange for some face value. Now people will buy these shares, and this is how John will get capital to grow his business. The price of the share will depend on the market conditions. If there is demand for his shares, then the price will go up, but if there is no demand, then the price will go down.
A stock market is a risky place. You cannot predict the market. The market is volatile, and the prices change every day. You need to be careful while choosing shares, so you don't face losses.
Now you got what the stock market is, but how do you make money out of it?
I will explain to you with an example, suppose you have 10,000 ₹, and you have already selected the stock in which you want to invest in (Just for more clarity, I will take a stock name) Tata motors. So you have brought 40 shares of Tata motors at an average price of 250₹. Now, if the price goes up to 270₹ within a week, then you will make a total profit of 20₹ per share, that is 20*40 = 800₹ ( 20 = profit per share - 40 = the no of shares you are holding). Here, if the price goes down, you will lose in the same way. So always decide on the stock you are selecting by spending some time on researching the stock.
Things you need to keep in mind before you invest:
- Do not time the market.
- Do not invest for the sake of investing. First, learn about stock market investments. Read about the same in books, internet, etc.
- Do not invest in a stock just because it is popular.
- Do not invest in a stock because somebody suggested you to.