Stock Market Tips are Helpful to Understand Different Investment Instruments

Posted by Santosh Sharma on May 17th, 2017

An upsurge has been witnessed in the stock market over the recent years that resulted in promising growth prospects of the Indian economy and thus, new and seasoned investors are their way of making profits by investing into the equities as a better option to invest their money in. though for new investors, who have less or zero knowledge of the stock market, can be a risky measure to step into a marketplace of which they don’t have any understanding about. In such case, the stock market tips would assist the new investors to understand the constant fluctuations of the market that can be rewarding for the investor if he focused and smartly invests in the market. However, it is first important to understand the basic capital instruments of the market for making a broad decision according to the preferences.

1. Stock – An ordinary stock represents the kind of minuscule ownership of a company in which a shareholder undertakes concentrated entrepreneurial risk that is associated with the business venture. If the company fails to flourish the success then the claim of the ordinary shareholder on the remaining amount last after all the other stakeholders such as creditors, employees, lenders, preference shareholders, government, etc. Therefore, it is crucial to undergo the stock market tips to attain a deep understanding about the market’s terms and conditions.
2. Preference share – A preference share carries a right for a dividend share on a fixed amount or an amount that is calculated at a fixed rate, before distributing the dividend to the equity shareholders. Though the right is not like any other liability obligation. Generally, if the dividend payable is not paid on the preference shares, then it is accumulated and paid in subsequent years. Preference shares can also be redeemed if the company decides to wind up to the extent of the principle value and the dividend that is not yet paid, before making payments to the equity shareholders.
3. Cumulative convertible preference (CCP) shares – A cumulative convertible preference share, or simply CCP shares, has two diverse features, that is, the dividend is accumulated if remain unpaid for a year and the preference shares can be converted into the equity shares according to the terms of the issue of preference shares.
4. Debenture – A debenture is the smallest unit that the company lends for the public. A debenture holder accepts a fixed amount of interest, unlike the indefinite stream of dividends that a shareholder receives.

However, one can choose the type of investment instrument to invest after undergoing the stock market tips for having a better understanding of the market operations.