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Shares: companies you own a piece ofrisk 4 of 5: high, can drop a lot

Domestic shares

Rules, protection and tax below are for India.

What it is

Part ownership of a company. A share entitles you to a slice of the profits the company chooses to pay out, called a dividend, and to a vote at its meetings. Its price on the exchange is what other people will pay today for that slice of the future.

Over decades, owning a broad spread of companies has been the most reliable way ordinary people have grown money faster than inflation. Owning one or two companies is a different activity: the outcome depends on those particular businesses, and plenty of once-solid names have gone to nothing.

Shares in your own country are the easiest to buy, cheapest to hold and simplest for tax. They also mean your job, your house and your investments all ride the same economy.

How it works

  1. You open an account with a broker, which holds the shares for you and executes your orders on the exchange.
  2. You pay the price on screen plus the spread, any commission, and in some countries a purchase tax.
  3. Dividends land in your account when the company pays them; you can take them or reinvest.
  4. You sell whenever the market is open, at whatever the price is then, and any gain may be taxed.

The honest pros and cons

For

  • The highest long-run returns of the mainstream asset classes, historically.
  • Cheap to buy and hold, with no fund fee at all.
  • Dividends give an income that has tended to grow over time.
  • You can sell in seconds on any trading day.

Against

  • Single companies fail; a concentrated holding can lose everything.
  • Prices fall 30 to 50 percent in bad years, and you have to be able to sit through that.
  • Picking winners is much harder than it looks; most people underperform a plain index fund.
  • Everything you own may already depend on your home economy, so more of it adds no diversification.

Getting it in India

Domestic shares available

  • Account type: Demat and trading account (listed equity gains are taxed at 20 percent short term and 12.5 percent long term above 125,000 rupees a year; interest is taxed as income)

Wherever you are

  1. Open a brokerage account, preferably inside whatever tax shelter your country offers.
  2. Decide whether you are buying a few companies you understand or a broad spread; if it is the spread, an index fund does it for you cheaply.
  3. Set a limit on how much of your total money sits in any one company; 5 percent is a common ceiling.
  4. Buy, record the price for tax, and stop looking at it every day.

Try it

Getting it from another country

Via United States allowed· available there

Use a SEBI-registered platform or an Indian bank's tie-up that files the LRS paperwork, and keep the foreign holdings on your tax return under the foreign assets schedule.

What you gain

  • Access to a far bigger menu than the NSE, including cheap US-listed index funds.
  • A hedge against rupee weakness, which has been the long run direction.

What you give up

  • Tax collected at source of 20 percent on remittances above 1,000,000 rupees a year, refundable but slow.
  • Currency risk in both directions and conversion costs at each step.
  • US dividends carry 25 percent withholding tax under the treaty.
  • Foreign assets must be reported every year; missing it carries penalties.
  • Tax: gains on foreign shares held over 24 months are taxed at 12.5 percent, shorter holds at your income rate; US dividends carry 25 percent withholding with a credit in India (source, checked 2026-09-17)

Currency reality check

The same INR 1,000 left for 10 years, at each country's savings rate:

Kept in INR at about 5.5% a year

INR 1,714

Sent to USD at about 2.5% a year, the account would show

USD 19 the tempting number

Brought back to INR after the exchange rate moved 39.5%

INR 1,782 what you can actually spend

Before tax, before fees, and before the risk that the exchange rate does something quite different next time. A higher rate abroad is only a higher return once it has survived the conversion back.

Go deeper

Also called

stocks, equities, ações, acciones, common stock

Often confused with

  • Corporate bond: A loan to a company that pays interest; riskier than lending to a government because companies fail more often.
  • Foreign shares: Part ownership of a company listed in another country; currency moves affect your return too.
  • Stock index ETF: A fund traded on an exchange that copies a stock market index at low cost.
Domestic shares in India · wealth-coop