Invest in Colombo Stock Exchange

Several years ago bank savings become one of the profitable and safest investments route. There were times that 5-year fixed deposit paid interest as high as 20% doubling your money by 4-5 years. However after the war, with much stable economy interest rates for savings dramatically reduced.  Therefore many people find ways to invest money for better return.

Though not the safest, the stock market has good potential for high profits if invest wisely. After the war the Colombo stock market has grown significantly and both local and foreign investments had increased since then. This article was indented to provide a basic idea about the stock market and how to invest.

Shares

When companies want to find capital without taking loans they issue shares to the public to cover identified percentage of their capital. Share holders will get several benefits such as right to vote for company decisions and dividends (apportion of the profit) for their contribution to the capital.

Stock market

Stock market is the place where the share holders transact their shares. Although shares are issued at a fixed price by the company, at the stock market the price fluctuate due to demand and supply. Although the company does not benefit from these fluctuations the share holders can make profits (or loss) by selling their shares to another buyer.

How to invest
To invest in the share market an individual need to find a mediator (a stock broker). The mediator then facilitates the transactions of the investor. All the individuals need to have an account in the Central Depositary System for transactions. However companies can issue shares directly to the individuals with a certificate and they can get the dividends. However selling of those shares require access to the stock market.