When you buy shares of a company, you become a part-owner of that company. But how exactly do shares make money for you?
What Is a Share?
A share represents a unit of ownership in a company. If a company has 1 lakh shares and you own 1,000 shares, you own 1% of the company.
Two Ways to Make Money
1. Capital Appreciation
If you buy a share at ₹100 and the price rises to ₹150, you have made ₹50 per share. This is called capital appreciation. You realize this gain when you sell the share.
2. Dividends
Some companies distribute a portion of their profits to shareholders as dividends. For example, if a company declares a ₹10 dividend per share and you own 100 shares, you receive ₹1,000.
What Drives Share Prices?
- Company performance (revenue, profit growth)
- Industry trends
- Economic conditions
- Market sentiment
- Corporate actions (bonus, split, buyback)
Risks
Share prices can go down as well as up. There is no guaranteed return. Always research before investing and never invest money you cannot afford to lose.
Disclaimer: This article is for educational purposes only.
