There is common misconception prevalent among most investors that ‘Stock investing is like GAMBLING’. Since the time an individual starts earning, the person is asked to avoid investing in the markets –as people have often heard a story of how a closed kin or Uncle has lost almost all his money in stock market.
However, this approach often leads to people missing out on the returns on their investments; and why even less than 2% population of India actively invests in the stock market.
But today we are going to present a few reasons to break this mind barrier and invest in stock market.
Table of Contents
Strong growth potential in Stock Market
Warren Buffet once rightly said, “The stock market is a device for transferring money from the impatient to the patient.” In the past decade or more the returns from the markets have significantly expanded beating all forms of investment. To give you a little perspective – MRF, which was trading below Rs 500 per share on August 24, 2001, has now touched over Rs 74,000-mark, – a return of over 14,700% or 148 times till date. Hence, with the tremendous growth potential in the stock market, it is always advisable to invest in stocks.
Stock price of MRF
Keep pace with inflation by Investing in Shares
Inflation is a state where the prices are rising and value of purchasing power of money is decreasing. Inflation occurs in an economy when there is an expansion of the total amount of money. The inflation in India for last few years has been around 4-5%. The return on saving on the saving account (Interest rate) is around 4-6% per annum. Hence, a saving account cannot beat the inflation.
Overall, if you want to beat the inflation, you have to invest your money intelligently. And the stock market is the best place for intelligent investors. If you buy stocks of decent companies, you can easily get a return of between 10-25% depending on how good the stock is and how much time you invested in choosing the stock. Therefore, investing in stock market is a great option if you want to keep pace with the rising inflation.
Make your money work for you by Investing in Shares
To build wealth and to financially secure ourselves – is an ambition we all foster. However being inconsistent regarding your investment choices is often the cause of financial problems. If equity markets make you jittery, get in touch with your financial advisor and invest in some blue chip companies. Your money will grow itself as the company prospers. In the meanwhile, when your money is growing by itself, you can use your time in whatever way you want. In this way, you can make your money work for you.
And the best part is, you don’t even need a huge sum to start – you can start investing with as little as Rs 500. Even if you start with a little amount but remain disciplined with your investing, you will soon start getting good returns.
Stock investing is a lot easier now
It is easy to invest in stocks in India now and hardly requires any expertise to buy stocks online. Trading with the online brokerage account, like Edelweiss (Link) is a lot simpler now. You do not need to go through all the boring financial newspaper and magazines now and need not to rely on newsletters to get companies financial reports now. You just have to log on to the Company’s website and you have all the information you need – at the tip of your fingers!
Create a secondary source of income by Investing in Shares
It has always been taught in our school- ‘Get a high paid safe and secure job’. What is not taught is what will happen if the company is shut down or you are fired. We should always have a backup. For public in India, stocks help to create this additional source of income. Most of the people are entirely busy with their office their entire life. For those people, Investing in the stock market can be their second source of income. Through the value appreciation and dividends, they can steadily grow additional income. That is why people need to start investing in stock market.
The Power of compounding of Investing in Shares
Stock Investing allows you to take advantage of compound interest, which grows your wealth exponentially. Most of the bank savings account gives you a linear simple interest. However, with investing in stock, you can get compounded returns. The famous scientist Albert Einstein once said- “Compounding is the eighth wonder of the world”. The world greatest investor, Warren Buffett, is known to have a compounded return of around 22% for the last 5 decades. Moreover, this compounded return for a long time has made him one of the richest men on earth. The power of compounding is one of the major reasons why people should invest in stock market.
Berkshire-Hathway-comparison
YouTube Video on Stock Market for Beginners
This share market video explains basics of equity market for beginners, how it works and how to invest in it. It also explains trading and investing.
Related Articles:
All About Stocks, Equities,Stock Market, Investing in Stock Market
- Technical Analysis and Fundamental Analysis of Stocks
- Investing in Equities: Stocks vs Mutual Funds
- Stock exchange: What is it, Who owns, controls
- Returns of Stock Market, Gold, Real Estate,Fixed Deposit
