Equity investing involves purchasing shares or stocks of companies, becoming a partial owner in those businesses. Equity investors profit from both capital gains (increase in stock price) and dividends (share of the company's profit). While this offers high potential returns, it also carries the risk of losing money due to market volatility.
Equity investing is ideal for those who have a long-term investment horizon, typically 5 years or more. It requires a sound understanding of the market, companies, and industries you are investing in. Investors can either directly buy stocks or invest through mutual funds and exchange-traded funds (ETFs), which provide diversified exposure to various companies and sectors.
For beginners, it's advisable to start small and gradually increase investments over time as confidence and understanding grow. Having a diversified portfolio also minimizes risk and enhances returns.