What is Direct Equity
If you buy shares of a company yourself, then it is called Direct Equity Investment. In this, you do your own research and invest money directly in stocks. When you buy shares of a company like Reliance, Infosys and Tata etc., then you become the owner of a small part of that company. Due to which you become a partner in both the profits and losses of the company.
Why Choose Direct Equity
In this, you buy shares in the stock market in your name. People often ask why should we choose Direct Equity?
Stock market has both profit and loss, but historically, stock market has given the best return in the long term. If you have invested in the right company, like by doing proper research of the company whether investing in this company is profitable or not, then you will definitely prove to be profitable.
In this, you yourself take decisions as to when to buy and sell shares of which company, you decide everything. You have complete information about which company your money is invested in.
Direct equity investment meaning
If you buy Tata shares yourself from NSE or BSE, then it is called a direct equity investment, which makes you directly a shareholder of the company. In this, you have to take the investment decision yourself. In this, both risk and reward are high. For this, you should have market knowledge and research skills.
How to Start with Direct Equity investment
First of all, it is very important for you to have basic knowledge of the stock market. Like what are shares, what is NSE, BSE, what is market volatility and understand the basic concept of risk-return. After having this much knowledge, open a demat and trading account. Demat account is where your shares are stored and trading account is where you buy and sell shares. Choose a broker like Zerodha and Groww.
Direct Equity Investment Calculator
When you invest in stock market, you should know how much your invested amount will grow and how much return you will get. Direct Equity Investment Calculator is one such tool which tells you the future value by taking all the inputs like your invested amount, annual return rate and time period.
The formula for calculation is Future Value (FV)=P×(1+r)^n
Example: If you invest ₹10,000 and the expected return is 12% and you invest it for 10 years, its calculation will be like this.
FV=10,000×(1+0.12)^10
FV ≈ ₹ 31,058
Higher Returns in Direct Equity
If you want higher returns from this then invest for the long term because historically the stock market has given higher returns in the long term. Keep getting company updates such as company news, industry trends and economic updates. Understand the company’s profit, growth potential and debt levels.
The Risk of Direct Equity
There is profit in this but there is also risk in it, it can go up or down anytime. Sometimes due to political issues and sometimes due to economic crisis. It is very important to keep emotional control in the share market. The performance of the company in which you have invested directly impacts your returns. If the business of the company falls due to any reason, then it directly impacts the company due to which the share price of the company can fall. Due to which you can also suffer a loss
Mutual Fund vs Direct Equity
| Feature | Direct Equity | Mutual Fund |
|---|---|---|
|
Control |
you do the deed |
The fund manager does the deed |
|
Risk |
High |
Moderate |
|
Returns |
Potentially Very High |
Steady, Moderate |
|
Effort |
Research and monitoring |
Professional handling |
|
Cost |
Low (brokerage only) |
High (management fees) |
|
Suitable for |
Experienced investors |
Beginners or busy investors |
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