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2. The stock market is not only for gamblers

Horror stories of naive investors losing their shirts (and a whole lot more) in the market are a dime a dozen.

And, so are those of savvy millionaires.

You could lose all your money in the stock market. Or, you could make a fortune.

Equity may be intimidating. But over time, it offers the highest return compared to all other investment assets.

When you invest in shares, you do not invest in the market. You invest in the equity shares of a company. That makes you a shareholder or part owner in the company.

Since you own part of the assets of the company, you are entitled to the profits those assets generate. Or bear the loss.

So, if you own 100 shares of Gujarat Ambuja Cement, for example, you own a very small part -- since Gujarat Ambuja has millions of shares -- of the company. You own a share of its assets, its liabilities, its profits, its losses, and so on.

Owning shares, therefore, means having a share of a business without the headache of managing it.

As the business does well and profits increase, the value of your stock goes up. Hence, you can make phenomenal profits and tremendous losses too. After all, businesses are risky.

The trick is not to get greedy and to be prepared to stay in for the long haul (at least three years)! You lose out when your sole intention is to make a fast buck.

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