Equity investments for beginners

Want to begin investing in equities but don’t know where to start?

Read our beginner’s guide to understand equity investments.

What is equity?

Equity is a stock/ share or any other security that represents an ownership interest in a company.

Hence when you own a company’s share, you are part owner of that company.

What types of equity investment options are there?

For most retail investors, the two main equity investment options are: equity shares and equity mutual funds.

Other options include private equity, which includes venture capital.

What is an equity fund?

It is a type of mutual fund that buys shares of companies in the stock market.

The goal of an equity fund is to invest in businesses that will grow, hence increasing the value of the fund over time.

How can I begin investing in equities?

You can open a demat account with a broker firm to invest in the stock market.

Or you can approach a financial advisor who will guide you on what to buy, and then purchase the funds for you.

Another option is to equity funds from a fund house directly.

For all of the above, you will first need to complete KYC (Know Your Customer) verification.

What are the risks of investing in equities?

The biggest risk of investing in equities is that the price of your holding can fall. Thus, if you sell at that time, you incur a loss.

However, if you are a long term investor, this risk becomes lower.

How can I lower equity risk?

Try to invest for the long term. Do not panic when the market, or your share or fund price dips.

Diversify your portfolio. Hold shares of different types of companies across industries.

Invest in funds that are exclusively equity and also have a mix of equity and debt.