What is equity?

This question is running in every Indian investor’s mind. Why? Because equities have done very well in past 10, 20, 30 years but investors are not able to make money. What is equity – a share, market, a fund or an asset class? Yes! Full details relating to Equity will be explained to you and help you in creating wealth. So read it to understand the right meaning of equity & reap the benefit.

If as a Financial Advisor we ask you to invest in Equities or Equity oriented Mutual Fund, the typical reaction is – “We don’t want risk in our investment but we want decent returns too”. Equity has of high rate of return and its impact over long run. Even though equities share have given the wonderful returns over long run not only in India but world over, Indians are not really comfortable investing their money in equities. Less than 6% of their investments are into this asset class whether directly or indirectly.

Equities offer an opportunity for individuals to invest in companies that are listed on the stock exchange – NSE, BSE in India.

Equity as an investment option:

The moment you think of equity, the following questions would surely cross your mind: – “How are the markets doing?”, “which is the best company to invest in?”, “Since the markets are going down, should I start selling my equity investments?” etc.

Most of the people visualize “Equity Investment” as sitting in front of the trading screen watching business news channel and actively buying & selling stocks. The other form of equity investing is waiting for the “tips” or “insider information” to make a killing in the short run by investing into such companies.