NIFTY50 has fallen more than 12% YTD. Many of you may be questioning your decision of investing in the equity market. Those you have started recently may be sitting on huge losses as even some of the good stocks have fallen 20 to 40 percent. In times like these, you must re-evaluate your equity investment. If you entered the market out of FOMO or for quick gains, it is time to understand the market. You should know the reasons to make an equity investment, and if they sync with your financial goals, then only you should stay invested in them.
What is equity investment?
When you buy and hold shares of a company, the process is known as an equity investment. It is called equity investment because the shares you own are equal to ownership in the company. When the company earns profits, you get income as capital gains and dividends. When the company incurs losses, you make a loss on your investment.
Also, as a shareholder, you receive voting rights, which means you have the right to participate in the company’s decision-making process.
Who should make an equity investment?
You can make an equity investment if:
- You have a high appetite for risk. You must know that equity investments are market-linked – there are no fixed returns. In some cases, you may end up losing your capital, or it could take years before you make capital gains on your investments.
- You need to gather proper market knowledge and skills to help you pick the right stocks for investments. If you cannot do that, you can choose Jarvis Invest for investing. It is an AI-driven platform that helps you create an equity portfolio and monitors your portfolio 24*7.
- You should make an equity investment only if you are ready to hold on to your investments for long. Since equity investment is volatile, the prices can fluctuate a lot in the short term. You can reduce the risk of investment by staying invested for a long time.
Benefits of equity investment – why should you invest?
Below are some benefits of equity investment:
Capital Gain and dividend: When the company in which you have invested makes a profit, the share price goes up as more people want to invest in profit-making companies, and you get rewarded in the form of capital gains. Also, a part of the company’s profit is returned back to investors as dividends.
Inflation beating returns: Equity investment can give you inflation-beating returns if you stay invested for long. With inflation-beating returns, you can create wealth.
Limited liability: If you own a business and your business incurs losses, you as the owner have to bear the complete loss. However, when you own the company’s share, your liability is to the extent of your investment in the company. Even though you own a part of the company as a shareholder, you do not have to bear the loss.
Liquidity: Compared to other investment options available in the market, direct equity investment comes with high liquidity. You can sell your shares when required and transfer the money to your bank account on settlement.
Bonus shares: In some cases, companies decide to issue bonus shares to their existing shareholders, and you can benefit from it in many ways.
Voting rights: When you invest in a company, you gain ownership of that company. It gives your voting rights in the company.
How to invest safely in equity?
As discussed above, equity investment is risky, and you need to research before you dive into the stock market. However, we know that a large percentage of investors in India either don’t have the time or the interest to do all the required research. Such investors should explore Jarvis Invest. Below are things the AI-driven application can do:
- Scans all stocks on 1.2 crore data pointers and suggests stocks to you
- Continuously monitor your equity portfolio and ensure it is always diversified and the overall risk is minimized.
- If any company you have invested in comes under a red flag, it suggests you exit it immediately.
Get started with equity investment using Jarvis Invest and take the first step towards financial freedom.