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Why do I need to invest in equity?

You stand to gain a portion of ownership in a company through equity shares. By buying such ownership of many companies, you can diversify your investments by creating an equity investment portfolio through the online share market.

When compared with other investment types, equities offer a number of benefits ranging from being a regular source of income to ease of convertibility to cash. Here's a look at some of the main advantages of share trading:

The prospect of higher returns Equity holdings in the share market offer the possibility of higher returns on the principal amount unlike banks and traditional investment options

They can be a regular income source Well-established companies usually pay their equity investors with an amount of money in both good and bad economy and typically every quarter. So if you know the best shares to buy in multiple companies and over different cycles can ensure a steady source of income, even every month

You can gain significantly on initialinvestment As companies grow and profits increase, the initial amount one invested in buying their equity shares holds the prospect to increase their net worth over time

They offer ease of liquidity In case you are cash strapped, they can be sold in the equity market without compromising much on its original value ensuring ease of liquidity unlike selling real estate which is usually a laborious process

Equities come with limited bindings In case a company incurs losses, an equity investor has limited liability. In most scenarios, small investors do stand to lose their capital investment but little or no other legal binding

Well-planned equity investments hold a vast potential to appreciate over a period of time provided one knows about the best stocks to buy. Such information can prove to be vital to tide across tough times in a stock exchange like the India stock market as it comes with its fair share of fluctuations.

As such these investments come with certain risks which need to be studied and understood well. But online share trading of equities offers one the possibility of testing waters by looking at popular stock recommendations from experienced financial experts before investing a large while leaving you with more knowledgeable about how you can make them work to your advantage.