Free Stock Trading Courses and Tutorials

1.1 What Is Investing & Why One Should Invest?

What Is Investing?

Investing is the process of allocating funds to various financial assets in order to put your money to work and profit from the results. This can serve as a supplemental or, in certain situations, primary source of income, allowing you to achieve your financial objectives. We tend to focus on only a few of the flaws that exist. And, in the end, turn a blind eye to the numerous advantages it delivers.

Why Should One Invest?

Higher Returns: –

  • Investing in the stock market allows you to potentially earn larger returns on your investment. As a result, Investing here allows you to compound your money over time and accumulate wealth for various life goals.

Beats Inflation: –

  • Inflation is a significant barrier to wealth building, therefore choosing paths that outperform inflation is the only way to get wealthy in the long run. Inflation is the gradual increase in the price levels in a given economy. It eats away at the value of
    your investment and your money’s purchasing power. For example- lets say your money is lying idle and kept in the cash vault in your home- however every year inflation is going up. This essentially means that if inflation rate is 5%- value of your money will decline by 5% every year if kept idle. Because the prices of products are going to go up by 5% every year. Thus the longer you keep your money doing nothing- the more value you erode. Investing in assets helps you beat inflation and generate some positive returns.

Easy & Flexible: –

  • Investing in the stock market isn’t difficult. All you need is a methodical approach to long term investing and some background research on the companies you wish to invest in. This can be done by yourself or you could hire a broker to assist you. All one needs is a trading and demat account to get started.

What Are Securities?

Securities are tradable financial instruments issued by a firm or the government that grant ownership, debt, or the ability to purchase, sell, or trade an option. The exchange markets are where securities are traded.
Stocks, bonds, mutual funds, interest-bearing Treasury bills, notes, derivatives, warrants, and debentures are all examples of securities. Interests in oil-drilling projects are also classified as securities. The issuer of the security is the legal entity that issues securities.
The level of inherent risk varies among securities. Equities, for example, are regarded riskier than bonds, although some equities are also riskier than others. An investor chooses the appropriate securities based on the level of risk he is willing to take. Furthermore, the liquidity of securities varies. Highly liquid securities, such as bonds, stocks, and money market instruments, are traded more often because investors can raise their price by purchasing more securities and achieving a larger return on investment.: Investment Basics