Stocks,Demat Accounts in India : Compare transaction charges, delivery charges, joining and annual fees and apply online for the best Demat Accounts in India

What is a Stock?

A stock represents a unit of ownership in a company. Most of the stock bought on the open market is "common" stock and carries the right to vote on important matters of the corporation including who serves on the board of directors. If the company distributes profits, stockholders normally receive them in the form of dividends.

What is stock market?

A stock market or equity market is a public market (a loose network of economic transactions, not a physical facility or discrete entity) for the trading of company stock and derivatives at an agreed price; these are securities listed on a stock exchange as well as those only traded privately.

What is common stock?

Common stock represents the majority of stock held by the public. It has voting rights, along with the right to share in dividends. When you hear or read about "stocks" being up or down, it always refers to common stock.

What is preferred stock?

Despite its name, preferred stock has fewer rights than common stock, except in one important area - dividends. Companies that issue preferred stocks usually pay consistent dividends and preferred stock has first call on dividends over common stock.

What is an Index?

An index is representative of the functioning of the market. This movement up or down gives you an idea of how the index is performing. The index is calculated "on the fly" during trading to give investors a sense of direction to the market it represents. Notice, index reflects "the market it represents," not "the market." Indexes provide useful information including:

• Even with their limitations, indexes show trends and changes in investing patterns.
• They give us snapshots, even if they are out of focus.?
• Indexes provide a yardstick for comparison.

What is the Role of Risk in Investing?

Risk is part of investing. It is the price you pay for a potential reward. The greater the risk, the greater the potential reward should be. Every investor needs to find the level of risk that is comfortable, but is enough of a reach to achieve their goals. Investors need to correctly identify the risk of a particular stock so they can determine if the potential reward is worth the chance of loss. Without any risk, investments often return very little. So the trade off is safety and low return or risk and potentially higher returns.

What is Beta of a company?

The beta is a measure of a stock's price volatility in relation to the rest of the market. In other words, how does the stock's price move relative to the overall market? It is a measure of the market risk or volatility of investing in a stock. It helps investors pick stocks that fall in their risk comfort zone. Stocks that have a beta greater than 1 have greater price volatility than the overall market and are more risky. Stocks with a beta of 1 fluctuate in price at the same rate as the market. Stocks with a beta of less than 1 have less price volatility than the market and are less risky.

What are bull and bear market?

A bull market is one characterized by significant and long-term growth in value in the stock market as shown by rising market indicators. In less technical terms, there are more buyers than sellers. A bear market is one where there are significant and long-term declines in market value a shown by falling market indicators, usually for two quarters.

What is an asset class?

You may have heard the term "asset class" in the media and wondered exactly what was meant. Financial professionals generally agree there are four broad classes of assets.

The classes are:

• Stocks or equities
• Fixed Income or bonds
• Money market or cash equivalents
• Real estate or other tangible assets

These are the classes of assets you have available to build a portfolio.

What are the advantages of investing in stock market?

1. Outperforms Other Investments

   Historically, the returns on investments in the stock market are higher than those on investments held in other markets and assets. This means that, over time, money will grow more if it is invested in the stock market. The historical average for stock market investments is approximately eight percent per year.

2. Easy Access

   Another advantage of stock market investments is the ease of access (and exit) in the stock market. Thanks to new Internet technology, an investor can easily take a position in a company and leave that position in a matter of seconds.

3. Asset Diversity

   The diversity of options is one more advantage of investing in the stock market. Companies that have their stocks listed in the market cover a range of industries and services. This offers the investor a chance to diversify his portfolio and make money in a variety of economic conditions.

4. Dividends

   Investing in stocks that earn dividends is a unique advantage of the stock market. Stocks release a portion of the profits in the form of dividends to their stock holders. Meanwhile, the stock still has the ability to increase in price, creating two ways for the stock to earn money for the investor.

5. Transparency

   While critics often point out the examples of companies that release fraudulent earnings statements as a way to taint the entire market, the vast majority of the companies release accurate information about the money they spend and earn. This adds a layer of transparency in the investment.

What are the disadvantages of investing in stock market?

1. Stocks are volatile investments. The price of a single stock can vary quite widely from day to day, and the factors that cause these price fluctuations are beyond the control of the investor.
2. Buying a widely diversified basket of stocks can be difficult for all but the wealthiest investor. Small investors are better off buying a quality stock mutual fund. Mutual funds pool the investments of many different people in order to buy a diversified set of stocks. This diversified approach helps to reduce the risk inherent in the stock market.
3. As investors near retirement, the amount of stocks in the portfolio should be reduced. Investors who are close to retirement age can no longer afford to take chances with their money, and that means moving a significant portion of their retirement funds to safer and more stable investments.
4. Buying and selling stocks costs money in the form of brokerage commissions, and many brokerage firms charge account maintenance fees as well. It is important to look for low cost alternatives when buying and selling stocks.

What is a Demat account?

Just as you have a Bank account for the safekeeping of all your money/cash, the Demat Account is for the safekeeping of all your shares and other eligible securities. The securities are held in this account in an electronic, also called, the dematerialised form. The Demat Account can be opened with a Depository Participant.

What are the different types of Demat account?

Just as you have a Bank account for the safekeeping of all your money/cash, the Demat Account is for the safekeeping of all your shares and other eligible securities. The securities are held in this account in an electronic, also called, the dematerialised form. The Demat Account can be opened with a Depository Participant.

What are the services available on Demat account?

You can avail the following additional services for your Demat Account:

• Pledging shares in your account to avail an overdraft
• Freezing the account/any specific security/specific quantity of a security
• Nomination facility

What happens if Dividend/Bonus/Rights are announced by the company?

In case of:

• Dividend - for shares held in the Demat Account, the amount will be credited to your linked Bank Account
• Bonus - the bonus shares will be automatically be credited to your Demat Account
• Rights - the allotted shares will be credited to your Demat Account or sent to you as physical certificates depending on the instructions you mention in the Rights application form