In this article, we will explain Stock Market and try to clear all your doubts about how to take the first step in investing in Stock Market. We all know how essential to invest in today’s world where inflation is rising every day and before start investing we should learn about it. So for that, we are here. When we hear the name stock market there are many questions come to our mind like What is the stock market? How does it work? How do people make money from it? And What is the process to start investing in it? these are all questions that come to our mind in the world of investment as a beginner. We will explain all of these.

What is Stock Market?

The stock market is a platform where buyers and sellers come together to trade on publicly listed stocks during certain hours of the day. The terms ‘stock market’ and ‘stock exchange’ are often used interchangeably. However, the main difference between the two terms is that only shares are traded on the stock market, while various financial securities such as bonds, derivatives, foreign exchange, etc. can be traded on the stock exchange.

The Importance of Investment
Learn the importance of saving. Find ways to invest your savings in appropriate investment vehicles. Compare historical returns on various investments and know what to expect.

Types of Stock Markets-

Stock markets can be divided into two categories: primary markets and secondary markets.

Primary stock markets
When a company first registers on the stock exchange to raise money through shares, it enters the primary market. This is called an initial public offering (IPO), whereupon the company is publicly registered and its shares can be traded among market participants.

Secondary market
Once a company’s new securities have been sold on the primary market, they’re traded on the secondary market. Here, investors have the opportunity to buy and sell the shares among themselves at prevailing market prices. Investors usually handle these transactions through a broker or other intermediary who can facilitate this process.

What Is Traded On The Share Market?
There are four categories of financial instruments that are traded on the stock exchange. These include:

Shares
A share represents a unit of equity ownership in a company. Shareholders are entitled to any profits that the company may earn in the form of dividends. They are also the bearers of any losses that the company may face.

Bonds
To undertake long-term and profitable projects, a company requires substantial capital. One way to raise capital is to issue bonds to the public. These bonds represent a “loan” taken by the company. The bondholders become the creditors of the company and receive timely interest payments in the form of coupons. From the perspective of the bondholders, these bonds act as fixed-income instruments, where they receive interest on their investment as well as their invested amount at the end of the prescribed period.

Open-ended investment funds
Mutual funds are professionally managed funds that pool the money of numerous investors and invest the collective capital in various financial securities. You can find mutual funds for a variety of financial instruments, such as stocks, bonds, or hybrid funds, to name a few.

Each mutual fund issues shares that have a specific value, much like a stock. When you invest in such funds, you become a shareholder in that particular fund. If the instruments that are part of the fund generate income over time, the unitholder receives that income in the form of the fund’s net asset value or in the form of dividend distributions.

Derivatives
A derivative is a security that derives its value from an underlying asset. This can be a wide variety, such as stocks, bonds, currencies, commodities, and more! Buyers and sellers of derivatives have conflicting expectations about the price of an asset and therefore enter into a “betting contract” about its future price.

1. Regulators, the gatekeepers of capital markets
Find out who and how regulators govern financial markets and understand the different types of financial market participants. Understand why markets need to be regulated.

2. Market Intermediaries
An overview of the financial intermediaries in the Indian stock market and the services they provide.

3. The IPO Markets (Part 1)
Understand the origins of business and the financing environment of companies. Learn about the different stages of financing and how financing works.

4. The IPO Market (Part 2)
Learn the basics of the IPO market and the process of investing in IPOs. This chapter also helps us understand the different IPO jargons that are commonly used.

5. The Stock Markets
We learn the basics of stock trading and understand why stocks move from minute to minute. We also explore the concept of calculating returns.

Conclusion-
Nowadays, investing in stocks can be considered one of the best ways to create long-term wealth. With a strategic investment plan, any investor can achieve their long-term financial goals with the help of the stock market.

If you want to learn about some good places to know where to invest you can click on this Best Place to Invest Money without Risk.