Benefits of equity investment

When we talk about equity, the term can hold different meanings, depending on the context and type of assets. Equity in general terms is the degree to which you own an asset, after all the debts associated with that particular asset are paid off. So when you buy shares of a company, you are doing an equity investment in that company. In this section, we will go into the details of equity, equity investment, advantages of equity investment and, how to invest in equities.

Key Points
  • Buying and holding a share in a company is known as equity investment.
  • When you own shares of a company, you gain ownership of that company.
  • The shares you buy in a stock market have high liquidity. This means your shares can be easily transferred to a different owner.

A lot of people want to learn about equity investment and execute it, especially in India. You can also invest in equity with a little bit of knowledge which you will get here.

What is equity?

Equity is nothing but ownership; ownership of anything, actually. Let's suppose you own 10 shares of a company XYZ, which has 100 shares in total. You will then be a 10% owner of the company. So, if this company makes a profit, your capital investment will rise and vice-versa.
There is a simple mathematical formula to calculate equity:


What is equity investment?

When you buy and hold a share in a company, the act is known as an equity investment. It’s called an equity investment since shares are ‘equal’ ownership avenues into a company - each share being equal to the other.

When you buy common stocks of a company from the share market, you are partially an owner of the company. When the company earns a profit, you get income from dividends and capital gains. When the company makes a loss, you will also incur a loss. Equity holders receive voting rights, meaning you will have the right to participate in the decision making process of the company.

Advantages of equity investment

How can you invest efficiently and safely in equity?

Wrapping Up:
  • Buying and holding a share in a company is known as equity investment.
  • The advantages of investing in equities are - limited liability, high liquidity, capital gains, control etc.Make sure you do your research, diversify your portfolio, and make smart decisions when performing equity investments.