Tag: income

HOW DOES THE STOCK MARKET WORK?

By Moksha Grover

Are you scared of investing in the stock market too? Have you heard of people losing all their money by investing in the stock market? If it is so, then you are not alone. There are many individuals with limited experience who are scared to invest in stocks after hearing the horror stories of investors losing 50% of their portfolio value[1]. The reality is that investing in the stock market carries some amount of risk. But it is one of the best methods to increase one’s net worth if carried out in a disciplined manner. Today, most rich and affluent people have the majority of their wealth from investment in stocks.  

WHAT IS THE STOCK MARKET?

The stock market is where investors connect to buy and sell investments — most commonly, stocks, which are shares of ownership in a public company. ` When you purchase a public company’s stock you get entitled to the stock ownership of that particular company that is you become a shareholder. Stock ownership implies that the shareholder owns a slice of the company equal to the number of shares held as a proportion of the company’s total outstanding shares. For instance, an individual or entity that owns 100,000 shares of a company with one million outstanding shares would have a 10% ownership stake in it.[2] Most companies have outstanding shares that run into the millions or billions[3]. Anyone with a brokerage account can easily buy stocks online through the stock market. Most of the stock trades take place between investors. If we buy shares of a company, we are not buying these shares from the company itself. We are buying shares of another investor who has decided to sell his shares.

TYPES OF STOCKS

There are mainly two types of stocks that are common stocks and preferred stocks.

COMMON STOCKS

Common stock is a security that represents ownership in a corporation. Holders of the common stock vote on corporate policies and elect the board of directors. Common stock is further classified on the basis of voting rights. The basic proposition of common shares is that they should have equal rights –one vote per share system. But some companies have multiple classes of stocks, wherein each class of stock has different voting rights. In such a dual-class structure, Class A shares, for example, may have 10 votes per share, while the Class B “subordinate voting” shares may only have one vote per share. Dual- or multiple-class share structures are designed to enable the founders of a company to control its fortunes, strategic direction and ability to innovate[4].

PREFERRED STOCKS

Preferred stocks are a class of stocks that are granted rights different from common stocks. They usually have higher claims over dividends and asset distribution. Preferred stocks have limited or no voting rights in corporate governance. Preferred stocks have more priority to investors than common stocks as they possess characteristics of both bonds and common stocks.

HOW THE STOCK MARKET WORKS?

The stock market works in a very simple and easy way.  In a stock market, buyers and sellers negotiate the prices of stocks and make trades. This process is carried out with the help of a network of exchange. When companies list shares of their stock on an exchange then this process is called Initial Public Offering or IPO. Investors buy and sell stocks among themselves. The supply and demand of stocks are determined by exchange networks like the New York Stock Exchange or the Nasdaq. Supply-demand helps to determine the price of the security. Price is determined by the investors and traders willing to buy or sell. Bidding by the buyer for the highest amount is done. The amount that the buyer is willing to pay is often lower than the amount sellers ask for. The difference in the amounts is called the bid-ask spread. The bid-ask concept is not much of a concern for beginner and long-term investors as the amount differs by pennies.

The working of the stock market is a fascinating example of the law of supply and demand, in real-time. If there are more buyers than sellers, then the price of stocks trends up. If there are more sellers than buyers, then the price falls down. The stock market serves two very important purposes both for the companies and the investors. For the companies, the stock market helps to raise funds from the public and helps in their funding operations. It also helps in the development and growth of the company and further expands its projects and business. As the companies grow and expand their business, shares bought by investors become more valuable, thus helping them to gain more capital. In addition to this, investors also receive dividends from the company as their profits. Public companies selling their shares need to disclose all the material information required and also give a say in how their business works to the investors.

All these processes that help in the working of the stock market seem to be complicated, but in reality, these have become relatively easy with the help of computer algorithms that help in price-setting calculations. Bid, ask and bid-ask all are available on the broker’s website with the required information. Today, the stock market is considered to be one of the most reliable ways of making money.

WHAT IS THE STOCK MARKET DOING TODAY?

Anyone can look at the performance of the stock market with the help of market indexes like the S&P 500 or the DJIA. Previously, when the covid-19 cases in India were at a hike, the stock market fell drastically. But now, in the current scenario around 3.2 per cent of the 1,216 listed companies on the National Stock Exchange that have reported their June quarter earnings have managed to defy the odds by expanding their operating margins on a sequential basis for four consecutive quarters[5]. In India, currently, there are 40 stocks that are defying a widespread trend[6].

HOW TO INVEST IN THE STOCK MARKET?

  1. Decide the kind of account which you want to open: –

The first step to investing in the stock market is to decide the kind of account you want to open. Investment accounts can be opened for anything ranging from short-term goals to long, retirement savings to college savings etc.

  • Open a brokerage account: –

After deciding the kind of account you want to open, you have to open an account at a provider called a brokerage. When you choose a company, do look at their fees and available investment opportunities.

  • Depositing Money: –

To further continue with the investing process, you have to make an initial deposit. You can also set up recurring deposits to automate your investments going forward.

  • Choose your investments: –

Once you are done with the above-mentioned steps. You can buy and sell securities. You can take up mutual funds, exchange-traded funds (ETFs), individual stocks and bonds etc. These include hundreds of individual securities. It is recommended to have a diversified fund-based approach as it reduces the risk of losses and bad investments.

  • Purchasing chosen investments: –

After choosing what you want to buy simply enter the ticker symbol in the buy field and indicate how many shares you want to buy.

STOCK MARKET VS STOCK EXCHANGE

The stock market and stock exchange are two very different things but they are often interchanged with each other. The stock market is a wider term than the stock exchange. In fact, the stock exchange is a part of the stock market. The stock market includes many stock exchanges such as the Nasdaq or New York Stock Exchange (NYSE) in the U.S and NSE – National Stock Exchange in India.

We might have heard people talking about the performance of the stock market. When they talk about performance they mean thousands of public companies listed on multiple stock exchanges. In general, too stock market is a very broad term which comprises all the terms like mutual funds, ETFs, bonds and other securities beyond just stocks.

[1] Adam Hayes, ‘How Does the Stock Market Work?’, Investopedia (1st June 2021) < https://www.investopedia.com/articles/investing/082614/how-stock-market-works.asp&gt; accessed 1st September 2022

[2] Ibid.

[3] Ibid.

[4] Ibid.

[5] Chiranjivi Chakraborty, ’40 Stocks that  are Defying a Widespread Trend in India Inc right now, The Economic Times (1st September 2021) <https://economictimes.indiatimes.com/markets/stocks/news/40-stocks-that-are-defying-a-widespread-trend-in-india-inc-right-now/articleshow/85822852.cms > accessed 1st September 2021

[6] Ibid.

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Top 5 Well Paying Part-time Jobs in 2021

When you’re keen on doing part time jobs, there comes an idea “What amount will I procure from the low maintenance occupations? All things considered, indeed, you can acquire well from low maintenance occupations as well. For jobseekers meaning to find low maintenance administration, the positions extended beneath compensate fairly and give employment opportunity dauntlessness and development down the way.

5 Part-time Jobs you can look for:

1. Copy Writer:

These days, there are numerous organizations who are looking forward to recruit independent marketing specialists to standpoint their work undertakings. Regardless of whether you want to produce site point of arrival content, compose sites for organizations, or something tantamount, you could make great compensation while doing it as low maintenance work.

Pay Scale: Part-time publicist begins with 5-10k month to month. With experience and better customers, can make up to 50-70k/month.

2. Graphic Designer:

Assume you’re keen on planning and delineations. All things considered, this low maintenance occupation will be ideal for you as Graphic creators are the ones who work in programs like Adobe Illustrator or Adobe Photoshop to produce designs for a variety of purposes.

Pay Scale: It is one of those jobs where your creativity decides your income. For part-time graphic designers, the income ranges between 10k to 1 lacs.

3. Data Entry

In the event that you like composing and your composing speed is acceptable, this work choice is ideal. This sort of occupation should be possible either on location or on the web. For certain positions, you’ll require explicit abilities like information on clinical phrasing or lawful.

Pay Scale: The salary ranges between 5k-20k month.

4. Translator Job:

These days, you can see different sorts of dialects accessible, and individuals are anticipating learning. In case you’re the person who realizes a subsequent language like (German, French, Chinese, Sanskrit, English), then, at that point it’s a lucrative work. You’d go through your days making an interpretation of one language into another, either verbally or recorded as a hard copy.

Pay Scale: The language is the key for the amount of money one can make. While local Indian language translators can make up to 10-20k per month, for foreign language translators it can go upwards of 50k.

5. Application developer:

In the event that you understand the advances and skill to foster an application. Then, at that point this work can be a solid match as low maintenance work. Numerous organizations are anticipating employing low maintenance application designers to make, keep up with, and update applications.

A part-time app developer can initially make 10-20k/month, but with experience, it can up to 3-5 lacs (yes, it’s true)

Income inequality in India

Shared Moral Blindness - Ted's Thoughts

How has the unpriviliged community in India fared within the last few decades? Has their scenario changed?

There square measure actually several changes that one might observe within the last twenty years. Access to food grains from the general public distribution system at a supported rate has improved; several villages are electrified; a lot of youngsters are attending primary colleges in villages and concrete slums; bathrooms are made in many villages; several currently use mobile phones.

But has there been any important modification within the financial gain of little and marginal farmers among Adivasis and Dalits?

This is in all probability a a lot of complicated question to answer. after we started our journey as development practitioners twenty years past, we have a tendency to had to conduct a village study.

The average financial gain of Adivasi households in an exceedingly village of Bihar’s Lohardaga district (now Jharkhand) was around Rs 15,000 in 1996. This matched with the findings of comparable such studies in different areas of the Central Indian Plateau (CIP) conducted by our peers throughout a similar time.

Similar studies by development practitioners show that across the CIP, the common financial gain of little associated marginal households in an Adivasi space was Rs 55,000-60,000 in 2020 — a rise of just about fourfold from 1996.

The financial gain of those individuals failed to modification abundant within the last twenty years, if we have a tendency to take under consideration the rate. The Net present value (NPV) of Rs 15,000 in 1996 was around Rs 67,000 within the year 2019.

Rising inequality

The scenario changing at the national level?

India’s per capita gross domestic product (GDP) multiplied 5 times between 2000 and 2019; to $2014 in 2019 from $443 in 2000.

This doesn’t mean that financial gain of the complete population has multiplied. The highest one per cent in India attained twenty one per cent of total country’s financial gain in 2019. This was eleven per cent in 1990.

The top ten per cent attained fifty six per cent of the country’s total financial gain in 2019; rock bottom ten per cent attained solely 3.5 per cent.

Wealth distribution tells an analogous story. The richest ten per cent Indians closely-held 80.7 per cent of wealth in 2019.

The Gini (inequality in financial gain distribution) constant points to associate increasing difference in Republic of India. The constant in 2014 was 34.4 per cent (100 per cent indicates full difference and zero per cent full equality).

The constant multiplied to 35.7 per cent in 2011 and to 47.9 per cent in 2018. India is just second to Russia within the world in terms of difference.

Agricultural work is one of the most common way to sustenance in villages. A complete of 26.3 crores households are concerned in farming activities in India, per the most recent census knowledge for 2011.

Of this, only 11.9 crore folks are land-owning farmers; 14.4 large integer are landless staff and peasants. A minimum of 86.2 per cent of all farmers in India own simply 47.3 per cent of the crop area, per the agriculture census knowledge 2015-16.

During 2010-11 and 2015-16, the proportion of tiny and marginal farmers grew to 86.2 per cent from 84.9 per cent, whereas the overall range of operational holdings grew to 146 million from 138 million.

There are 126 million tiny and marginal farmers, that points to fragmentation of lands which a lot of medium farmers have become tiny and marginal farmers. These farmers along in hand concerning 74.4 million hectares of land — or a mean holding size of simply 0.6 hectares every.

Between 2010-11 and 2015-16, the amount of tiny and marginal farmers rose by concerning nine million, per agriculture census 2015-16.

Per capita land holding of rock bottom sixty seven per cent marginal farmers reduced to 0.38 hectares from 0.4 hectares within the last 20 years. The world isn’t enough for farmers to grow food for even six months.

Nearly 17 per cent smallholders have a mean land holding of 0.4 angular distance — a discount of 1.42 angular distance in 2000. The typical holding of scheduled tribe marginal farmers is 0.48 ha; for scheduled Caste, it’s solely 0.37 ha.

The country has another 3.76 crore households of landless laborer within the same time.

Pandemic made it worse

French economic expert Thomas Piketty, in his book Capital in the 21st Century, came up with a straightforward plan to elucidate difference in terms of wealth distribution takes place in associate degree economy.

He believes, once the come back on investments (r) is over the speed of economic process (g) of the country, a lot of wealth gets accumulated within the hands of a couple of (who own the suggests that of production) as compared to the busy category.

Piketty showed that the typical rate of come back on investment was 5 per cent throughout history. He finished that any rate below five per cent can cause a lot of difference as a lot of wealth are going to be generated for a couple of investors as compared to people who don’t own any suggests that of production.

Whether Piketty’s findings, largely supported Europe and also the u. s., are applicable for countries like India where economic history and pathways are totally different, is debatable.

However, a thirty five per cent increase within the web value of the billionaires in India throughout the novel coronavirus malady (COVID-19) pandemic, once India’s growth was negative ten per cent, could force US to assume if Piketty was right.

The approach ahead

India’s economic process has caught up considerably. This can be the time once states ought to invest: cash must move into the hands of the marginalized.

States earn cash through taxation. Increasing tax on the rich folks is that the obvious resolution. Piketty additionally projected the same live to cut back difference. The next rate of tax for billionaires are often the simplest way to get a lot of revenue for the state.

In any case, withdrawal of Central Public Sector Undertakings associate and public sector banks can’t be a permanent resolution in an economy where difference is rising sharply.

There is a desire to trace what’s happening within the economic condition pockets of India. A periodic study could facilitate policy manufacturers to believe the problem a lot of seriously and are available up with higher ideas to cut back inequalities.