Currently, experts are suggesting new investors to invest in the stock market as the country moves to strengthen savings and financial inclusion. The government is pushing more people to invest and raise development finance on the securities market. Yet there are many people, who are not able to understand the benefits of the market. Security Market is a component of the financial market sector, where shares can be bought and sold. Following are few reasons that encourage you to invest in the security market.
The market includes equity markets, bond markets, and derivatives markets. Here prices can be determined and participants both professional and nonprofessionals can meet. Stocks or equities are referred to the amount of ownership you buy into a company. It can be purchased in the form of stock and dividends. Bond markets refer to a type of loan in which an investor lends institution money which it will repay with interest at a given time. Various government agencies, as well as public authorities, issue the bonds with the initial lending amount agreed to be repaid at a later date. The Bonds are said to be a reliable securities investment as they generate a fixed form of income through interest. On the other hand, the value from direct securities in the form of futures, and options are derived from the derivative contract securities.
Types of markets
Consider the two types of markets while investing in securities. First is primary and second is secondary. The money for securities is received from investors through an initial public offering in the primary market. Here interested investors buy shares in a company and become part owners. While in the other type of market, the securities are assets held by investors who then sell the shares to other investors when there is the need. Investors can sell whole or part of their stake in any given listed firm. Investing in securities is always well-organized and exchanges are licensed to maintain and run both primary and secondary markets smoothly.
The advantage of the securities market is similar to that of any other markets. You might think that investing in stock is risky, as it draws attention to the huge gains and losses of some investors. Once you are capable of managing the risks, you can take advantage of the stock market to secure your financial position and earn money.