Article on "Do you want to become financially independent at your 20s?" by Shruti Chopra

 

Do you want to become financially independent at your 20s?

By Shruti Chopra, Roll No. 237

B.Com Semester IV, Session 2020-23

Do you want to learn how to make money out of money?

Yes, you read it right, you can be financially independent at your 20s, you can help your parents by reducing the burden of your educational expenses. There are a lot of ways of doing so, like; taking tuitions, doing part time jobs, etc. but today I am going to tell you about a source which is way more convenient but requires a good amount of knowledge and patience. Also it is not a children’s play .

Yes, you guessed it right. I am talking about stock market.

What is stock market

It is a place where regular activities of buying, selling and issuance of shares of publicly held companies take place. In the stock market one can also trade in financial instruments such as derivatives, bonds, mutual funds along with shares of a listed company.

Now, what are financial instruments?

A financial instrument is a contract between two parties, which can be traded and settled. The contract represents an asset to one party (the buyer) and a financial liability to the other party (the seller).

Ok, this is going to be very extensive and you might get bored, so just let’s not go into the depth of it; rather if anyone gets interested towards stock market by reading this blog can simply search on google, there is an ample amount of information available.

Now, you might be thinking about what are listed companies, and where are the actually listed?

So, here starts the main topic of this blog.

What is a listed company & where is it listed?

Imagine you want to buy a property and for that you do not have enough money of your own, so you decided to withhold some money from your friend in exchange of some interest. Similarly, companies do raise money from normal public by getting listed on an exchange. The sale of stock on the open market is one way to raise a great deal of money fast.

In general, company that what to grow and expand have a few ways to raise money.

·      They can borrow the money and pay interest on it.

·      They can seek private investors with deep pockets, who will expect a measure of control in return for their investment

·      They can go public and raise money through sale of share of the company.

What are stock market indices?

We all know a body moves when an external force act on it. Similarly, there are external and internal economic factors acting on a domestic market from all directions resulting in market trends. These trends are either upward or downward in nature. And to help you distinguish between the two trends, there is a metric called the stock market index.

A stock market index combines several stocks to create one aggregate value that investors use for measuring a market (e.g. Bombay Stock Exchange and National Stock Exchange).

In the Indian context, there are two major stock market indices used for evaluating markets: SENSEX and NIFTY. Indian investors can track changes in these indices value over time and use it as a benchmark against which to compare their own portfolio returns.

Now when investors talk about the market, it means thar these are stock market indexes of various sectors of the market that don’t always move in tandem. Because if the did, there would be no reason to have multiple stock market indices. Thus, by understanding of how stock market indices are created and how they differ, you will be able to make sense of the daily movement in the Indian marketplace.

Types of indices in Indian stock market;

·     Benchmark indices like BSE Sensex and NSE Nifty.

·     Brand- based indices like nifty 50 and BSE 100.

·     Market capitalization – based indices such as BSE Midcap and BSE Smallcap .

·     Sectoral indices such as CNX IT, Nifty FMCG, Nifty Bank Index, S&P BSE Oil and Gas, so on.

Apart from these, thematic indices are other type of indices in Indian stock market, which reflect the performance of broad- based investment themes.

 

Index	Price	Change	%Chg
NIFTY 50	16478.10	121.80	0.74
SENSEX	55320.28	427.79	0.78
NIFTY BANK	35085.40	139.25	0.40
NIFTY IT	29761.50	289.30	0.98
S&P BSE Smallcap	26039.27	61.27	0.24

                                                  Source ; moneycontrol.com

 

So readers, this topic is something that cannot be covered in one blog, to know it well one need to have a deep down research and go through a lot of blogs like this.

But to streamline your research, I have some recommendations of books and websites which will help you a lot to become a professional trader:

BOOKS :

·      NEW TRADER RICH TRADER

·      POWER OF YOUR SUBCONSCIOUS MIND

·      HAPPY MONEY

WEBSITE:

·      WWW.MONEYCONTROL.COM