The Significance Of NBFCs

If you ask someone what the stock market is, they will probably tell you that the stock market is where companies' stocks, or shares, are bought and sold on a daily basis. While this definition is true, it is also an oversimplification. In fact, even several professionals can be hard-pressed to find an accurate description of the stock market, at least one that is comprehensive enough without being ascendant technical. The stock market, chiefly, is the platform that facilitates exchanges of financial securities and derivatives. These securities include shares and loan, which companies then utilize in equity capital markets in order to make the process of capital raising all the more fruitful.

The important thing to know is that while the stock market can get confusing at times, especially with its technical jargon, and even though it is prone to risks, with the right financial guidance there are several benefits to be reaped by investing in it.

A prime advantage of investing in shares is the high rate of liquidity. Unlike mutual funds, shares can be bought and sold at the will of the investor for hard cash, which is transferred immediately to the seller's bank account. There is no waiting period to sit out in the stock market, and one can convert their assets almost immediately. This is one of the reasons why stocks are so volatile in nature.

Also unlike mutual funds, stock market investors have sole proprietorship of their assets, even in the market itself. What to buy, what to sell and what to retain are decisions made by the shareholders, rather than by an external fund manager. While brokerage advisors and rating agencies are available for consulting, the final decision is the investor's. Moreover, it has been found that the stock markets provide the most lucrative returns in the long-run, especially when the investment is followed up on a daily basis with constant trading.

Additionally, there are no time stipulations and constraints in share market investments. Mutual funds most typically come with per-determined holding periods, and opting to withdraw your assets before maturity will most likely result in the levying of a fine, or having to forfeit the interest amount, or some such penalty. In such a case, your money is always in the market, whether you like it or not, whereas in stocks, one can put in or pull out funds at their own wish, and to whatever purpose they have in mind.

Keeping in mind these merits, investing in stocks is an ideal way to channel your funds, provided that you either proactively manage your portfolio, or get a professional to do it for you.

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