In trading too, Amit likes to invest in a variety of financial instruments apart from stocks.
Amit’s diverse investment portfolio consists of several financial instruments like bonds, mutual funds & derivatives.
Bonds are issued by companies & the government to raise money for expansion & finance a variety of projects. Returns on bonds are periodically paid to the investor, in the form of a fixed interest amount.
A mutual fund is a professionally managed trust that pools the savings of many investors & invests them in a bouquet of shares & other financial assets
A derivative is a contract between two parties & involves speculating on the price of a certain asset on a future date. The most common types of derivatives are futures & options.
Meet Ajay. He owns a medium-size company in Mumbai. To expand his business outside Mumbai, Ajay would need Rs. 1 crore. To raise this amount, Ajay decided to sell a part of his business to the public by issuing shares through an IPO. When a company issues shares to the public for the first time, it is done through an IPO or Initial Public Offering.
Ajay decided to sell 10% of his 10 crore company by issuing 1 lac shares priced at Rs. 100 each. The shares were then listed on a stock exchange for the public to buy. In time, Ajay’s business flourished & the share prices of the company increased. The investors who bought his shares through the IPO sold their shares at a higher price & made great profit.
The power of compounding what it means Aashish a young professional and his father an avid trader with Angel Broking are talking when are she asked what the power of compounding is all about his father explains through the power of compounding a small amount of money can grow into a substantial sum over a period of time the longer the timeframe the greater the value for example in order to achieve your future financial goal you invest 1 lakh rupees per annum in a bank fixed deposit for 30 years at five point five percent interest that is post tax effective rate your savings will grow to seventy six point four lakh rupees which is two and a half times the amount you invest in equities however have historically outperformed other asset classes yielding approximate returns of 16 percent over a longer period of time if you invest the same amount for the same period in equities instead of a bank fixed deposit and assuming you get 14 percent interest your savings will grow to four point one crore rupees which is more than thirteen and a half times the amount you invested this is the power of compounding thanks to his father Ashish now understands the power of compounding.
Venkat wishes to invest in shares, but is not aware of all its benefits.
So, his friend Ashish – an active trader with Angel Broking explained the 3 quick benefits of equity share investment.
Returns & Dividends:
If the company, Venkat has invested in, earns a profit, their stock prices rise, increasing the value of his investment & giving him returns. In addition, the company might also share its profits in the form of dividends.
Stocks are traded in exchanges & can be quickly turned into cash.
Venkat can spread his investment over different companies & industries reducing any risk of loss.
To leverage theses benefits, Venkat is now ready to invest in equity shares with Angel Broking as his trusted partner, and Open a Demat + Trading account with Angelbroking.com.
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