Risk Associated With Stock Market Investments

unlisted stock price

The stock market is trading at its peak. Although investors aren’t sure if it’s the right time to stay invested or take an exit from the shares in the market. Investors with a high risk-taking attitude prefer investing directly in equities. At such a high level, if the market falls, the investors end up losing a large portion of their investments. Seeing significant profitable gains, the investors don’t want to give up on the investments. Possibly, the market continues to make new highs and this fact retains the investors for a long time.

In the trading of unlisted shares, the investors don’t find the unlisted stock price easily that makes investment difficult. Unaware of the underlying risk in the trading, the newbie investors don’t make wise decisions.

Know the risks involved in stock trading

Market threats

The facilitation of the stock market depends on the demand and supply of the stocks. Hence, the market fluctuates every day and trading also occurs within a day. Investors gain profits through dividends or by the selling of the shares at a higher price. In some instances, if investors wish to sell their shares and the prices are low at that specific moment, then they end up losing a chunk of money. This is said to be market risk.

Company risk

A share signifies a part of ownership in the company. If the company encounters financial instability, then the stock prices might fall considerably. Many investors identify the financial status of the companies in the middle of their investment. Hence, investors tend to withdraw their funds which leads to a price drop in the market.

Liquidity

If investors stay for a long-time in the investment, they are likely to make huge profits from the dividends consistently. Since dividends bring regular income, the liquidity of the company is crucial. If there is a lack of liquidity in the companies, they can cut back on dividends. It affects the stock prices of the companies in the exchange market adversely.

Taxation issues

The exchange market is regulated by SEBI (Stock Exchange Board of India). Based on the economic changes, there occurs a change in the taxation rules. Further, it affects particular sectors and the prices may fall within no time.

More or fewer interest rates

With the changing economic factors, the government makes changes in the interest rates on loans and deposits. If interest rates increase, the companies get high-interest loans. It cuts their profit and the market price of the stocks is affected.

Contrarily, the lowering of interest rates signifies the slowdown in the economy, and businesses suffer.

Regulation risks

Most of the sectors function under regulating bodies. And, if the respective bodies make changes in the rules, it impacts the businesses to a large extent causing a price drop in the shares.

With the facilitation of the shares in the stock market, the investors have a higher possibility of making higher returns from the investments. Adding more to it, Unlisted Assets is a tech-enabled platform that helps you invest in potential shares to increase your assets. To buy shares of unlisted companies, Unlisted Assets is the ideal platform.

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