Direct Stocks

Investing in the share market means buying stocks of a company. Stocks are a type of security that gives stockholders a share of ownership in a company. Stocks also are called “equities.”

Direct stock investment, in a nutshell, is perfect for individuals who want the freedom to design their own portfolios.

Direct stock investment can be very rewarding, however, the risk of loss in direct equity is also very high. It is not easy to understand equity. One needs to understand the underlying business and industry the business operates in, before investing in equity (stocks).

This means, an investor have to analyse the company’s past records, financial performance, management experience, and even external factors such as Government policy, foreign exchange rate, and political changes both domestically and internationally.

Advantages of Investing in Direct Stocks

Higher returns
One of the major advantages of equity is that investors can get better returns on their investments specially in the long term. Equity as an asset class has given one of the highest returns in the past on the long-term basis.

Easy & Flexible
Anyone who is above 18 years and has Pan Card, Bank account and address proof can open Demat account and begin investing in equity shares. One can start with a small investment and decide how and when they want to hold or sell their shares as they wish.

Tax Efficient
Gains on Equity are taxed under Capital Gains and are much more tax efficient as compared to other Investment options. If shares are sold after 12 months they are treated as LTCGs (Long Term Capital Gain) and are taxed at 10% on amounts of over Rs.1 lakh, Till 1 lakh there is no tax on LTCG. STCGs (Short Term Capital Gain) get taxed at 15%.

Ownership Benefits
When you invest in equity, you own a small part of the company. So, you have ownership over a small fraction of company assets and get returns in the form of dividends if the company does well and in form of capital appreciation in stock prices.

Collateral against loans
If you need urgent Liquidity and don’t want to sell shares, then Equity investors can pledge their equity shares as collateral for loans. Most lenders offer loan amounts amounting to 50% of the equity shares value.

Very Easy to Start
Investing in equity shares is simple. Today you can invest in equity online without the help of a broker or financial planner. Just set up an account and have a plan. Opening a demat account is now completely online and it can be opened in less than 15 minutes.