How does the Stock market work ?

The investing stock market scares everybody, not only to you. Those who have little financial knowledge are either horrified by losing a great chunk of their portfolio or overwhelmed by hot tips to make more money. Either ‘Greed’ or ‘Fear’, anyone must be present in the stock market, it moves one to another.

In practical life, the stock market carries risks, but with a disciplined manner, one can make a good chunk of corpus. The average person keeps their net worth at home, but most of the rich people invest their major money in the stock market. Let’s go into the details about, what is stock and what are different types. 

Stocks normally carry voting rights that facilitate the common shareholder to participate in elections and meetings. Whale preferred shares do not have any voting rights. Preferred shareholders receive dividends and assets at the time of liquidations.

In terms of voting rights, common stocks give equal voting rights, one stock per share held. So preferable way to grow a startup company. In the initial stage a company invests from his personal savings, from friends, family members and in later stage need to sell shares to grow more.

Some companies have dual or multiple voting rights attached to each class. Dual or Multiple class stock companies enable the founders of a company to control its strategic directions, growth and innovations.

Why Company Issues  Shares in Public ?

Almost all of today’s giant companies are previous years’ small companies. Like Facebook founder Zukerberg to founder Ratan Tata of Tata groups. All were small corporations some decades ago. 

However, to grow at such a pace needs a huge amount of money. Depending on scale and scope, the founders of such companies need to have the brains to hire employees, technologies, factories, sales and distributions.

Raising Capital For Growth

New born or startup companies sell their shares (equity financing) to raise their fund. Another way, companies may take loans (debt financing). Debt financing needs more assets, which is more difficult , as startups are not having much assets. Due to lack of funds and less assets, new companies won’t go for debt funding.

Hope this info will help you in getting into stock investment. I assure you to get more knowledge sharing contents for you soon. If you want to do any kind of investment, then please contact our expert team PLENTYSURE (www.plentysure.com) to advise. For Buying Whole Life Insurance Plan CLICK here https://agents.ethoslife.com/invite/d902e We also help NRIs (Indian Americans) Financial planning for busy working professionals. Contact us for the same. Can you tell me, what is your experience of the Stock market ? Do write in the comments.

Thank You,

Jyoti Prakash Nayak, B.Sc MBA BA CFP

CERTIFIED FINANCIAL PLANNER & FINANCIAL WRITER

Web : www.moneygrainsexports.com

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