Some Basic Questions

Let us begin with some basic questions you are likely to ask.

What are Shares?

In everyday language, shares normally refer to equity shares of ordinary shares of a company. The terms shares and stocks essentially mean the same thing, the latter being a more common American usage.

An equity share is evidence of ownership in a company. In other words, Certificates or book entries representing ownership in a corporation or similar entity. The ownership rights are proportionate to the number of shares one own.

The shares are issued by companies in fixed denominations, called face value or par value of that share, which is clearly indicated on a share certificate. Please note that face value bears no relationship to the share's market price which fluctuates all the time. Moreover, Dividends are issued at face value of a share and not its market value.

What is Investment?

"An investment in knowledge always pays the best interest."
-Benjamin Franklin (1706 - 1790)

Investment essentially refers to what you do with your savings in order to preserve them and make them grow or yield an income. Keeping your savings in form of cash will surely diminish it in value because inflation causes the purchasing power of money to go down. Therefore, in order to maintain or increase the value of your savings, one should keep them in forms other than cash. This is what investment is all about.