Trading Instruments: Equities
Equities mean shares in a company and equity investments, also known as stock investments, involve purchasing shares or ownership stakes in a company or corporation. The equity investment entitles the investor to a portion of the company’s profits and assets, as well as voting rights in certain cases.
Equity shares provide long-term capital to a company and investors can only reclaim their capital during the company’s liquidation. These shares can also grant voting rights to the investors to participate in company meetings. By investing in equity shares, investors are entitled to a share of the company’s income and also gain an ownership claim on the company’s assets.
Investing in equities can offer the potential for higher returns, allowing you to benefit from the company’s success through capital appreciation and dividends. However, there are risks involved.
How to Invest in Equities?
- Individual stocks
- Exchange-Traded Funds (ETFs)
- Mutual Funds
Types of Equity Investment
- Shares
- Equity Mutual Fund Investments
- Equity Futures
- Equity Options
Risks Associated with Equity Investments
As an investor, you need to be well aware of the risks associated with equity investments and that they are subject to market fluctuations and volatility. Also, investing in individual stocks also carries the risk of company-specific events impacting stock prices. The broader economic, political, or financial system events can affect equity markets.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.