Equity is the amount invested in a company. The company’s capital is divided into small parts which are known as equity shares. These shares are issued in public by a public company to raise funds. The return generated on equity is called a dividend, which the company is liable to pay to its shareholders when it earns a profit. The dividend is not compulsory to be paid on equity. When the liabilities are deducted from the assets of a company, equity is derived. It holds direct ownership in the company.

Equity trading can be done by buying or selling shares through a registered stock exchange. In India, the stock exchanges are the Bombay Stock Exchange and National Stock Exchange. These stock exchanges help the traders to buy or sell the shares based on their willingness.

One way of earning returns on equity is by dividend or through capital appreciation. The investors have to hold onto the shares for a long period for the same. The other way is to earn by trading equity in correspondence to the market trends. This type of earnings can be generated in a short period.

To start investing in equity, an investor needs to have a thorough and deep analysis of the stocks that he/she is interested in. The investor can firstly select a specific sector to invest in. Find some stocks that are appealing and filter them. Use financial statements and financial ratios to study the fundamentals of the company. The investor can use technical trends to understand the market fluctuations and historical trends to study the behavior of the stock. The investor should study the business, the management, and the efficiency of the company as well while analyzing the shares of the company.

Equity shares are based on the company’s performance and market trends. They are not completely safe. An investor needs to have in-depth research of the stocks while investing. Serious fluctuations can lead to earning high profits/losses depending on the market conditions.

An investor needs to determine his/her investment psychology i.e. aggressive/moderate/conservative. This will form the base of the investment. After that, select stocks whose returns match the behavior of the investor. Understanding the company, studying the financials, analyzing the charts can lead to shortlisting of few stocks. Later, an investor can select one stock based on his research.

Equity investment is easy and a better way to earn high returns in a short period. They can fight against inflation and help in wealth creation. Along with this, equity provides liquidity and tax benefits. For the same reasons, investing in equity is a better option than other investment alternatives.

A trading account is used to buy/sell stocks in a share market. This account holds the securities held by the investor. An investor can use the services provided by a brokerage firm to maintain the trading account. With EquityBox, there are no charges to be paid for the first year of the trading account.

A stop loss is used to set a limit when the prices go beyond the expected limit in a reverse direction than predicted. This helps avoid losses to the investor.