Ticker

6/recent/ticker-posts

7 Reasons to start investing in Stock Market

Introduction:


We all want to become financially free as early as possible. The question is arises that at what age you want to become financially free in your 60s or at the age of 30 to 35. If your answer is 30-35 years you must have to intelligently manage your investment. 

For which we do savings from our income and invest it in banks in the form of various deposits such as saving, recurring and FD'S or by buying gold, land and properties etc.


Stock market investing


But, we hesitate to invest in stock market ( exemptions are always there). People have the perception that investing in stocks is like a gambling and their money is not safe. 

That's why only 3% of Indian population invests in stock market. Which is absolutely wrong as the investments are made by doing different types of analysis such fundamental and technical analysis. In this article we give you 7 reasons to start investing in stock market. 

7 Reasons to start investing in Stock Market:

🖥 Table of contents:










1) Better Returns:


Investing in stock market can give you better returns than any other investment. I agree with that there is some risk involved in investing in stock market but investing after doing a proper study can reduce the risk of loss. Investing fundamentally strong shares for long term such as 5 to 10 years is always positive. 

 Other investments have a potential to give you return of 10% to 100% may be. But, here if you have patience than you can get that much of returns which you can't imagine. 

For e.g. In the year 2000 the share price of MRF company is Rs. 2530 today it's price is Rs. 82,150.

2) Capital Gains:


Apart from the returns earned by the investor by selling the share that they have, the investors of stock market enjoys capital gains whenever company gives bonus share or right issue to its existing shareholders and when it split its share. 

For e.g. Wipro is the company which made its shareholders millionaire by way of issuing too many time's bonus share. If in the 1990s you had invested Rs 10,000 in Wipro company you have got 100 shares and kept it till the date, then today you would have 2 Crore shares of Wipro company in your Demat Account. 


Announced on Ex date
Jan 18, 2019
Bonus ratio- 3:1
Mar 06, 2019
April 25, 2017
Bonus ratio- 1:1
Jun 13, 2017
April 23, 2010
Bonus ratio- 3:2
Jun 15, 2010
Apr 22, 2005
Bonus ratio- 1:1
Aug 22, 2005
Apr 16, 2004
Bonus ratio- 1:2
Jun 25, 2004
 

3) Additional Income:


Basically, the stock market investors gets returns by selling the share that they have at higher price from its buying level. This is called return on investment. This is the main revenue or profit for the stock market investor. 

Rather than return on investment investors gets additional income in the form of dividend. When a company earned profit it shares a few percentages of profit with its shareholders by giving dividend. But, it is not compulsory for the company to give dividend. It is optional. Company can use entire profit for the expansion and growth of the business

4) Help to tackle Inflation:


Inflation is the state where the prices of all commodities and services rises and the capacity or power of the money to buy the things is decreases. This situation came in existence because of the over supply of the money in the market. 

For e.g. A man went to a grocery shop and asked the shopkeeper to give him rice of Rs 50. The shopkeeper has given him 1 kg of rice. After, a month he again went to that shop and asked the shopkeeper to give him rice of Rs 50. At this time the shopkeeper has given him 800gm rice. He asked him why you have given me 800g instead of 1kg. The shopkeeper replied that the price of rice is increased. The difference which came in the example is because of inflationary effect. 

According to a research inflation rate of India from last couple of years is around of 4% to 5%. If you invest your money in saving accounts it offers you average return of 3% to 4%. Which is even less than inflation rates. If you invest the money in quality stocks it can pay you near about 10% to 12% consistently. So, you can tackle the inflationary pressure. 

      

5) Tax Benefits:


Stock market investors enjoys several tax benefits. There is only 10% capital gain tax for long term investment in case of capital gain of more than 1,00,000. Which better than investing in saving accounts or FDs. 

From FDs you can get maximum return of 7% to 7.5% which is again taxable depending on your tax slab. 

You Can Also Read, 




6) Easy to Invest:


"Everyone has a brainpower to follow the stock market. If you made it through fifth- grade math, you can do it."
                                                      - Peter Lynch. 

There is no rocket science to pick a quality stock. It is very easy. Anyone who have little knowledge of financial market and who keep watch on all the events happening in the market can pick a good quality stock by doing small research on fundamentals and technicals of the company. Anyone can earn a decent profit from stock market. 

7) Diversification:


Warren Buffett says that "Don't put all the eggs in a single basket. "

The special feature of the stock market is diversification. You can diversify your investment. Investing in one place is risky as if anythings happened wrong it affects our entire investment. Diversification helps you to minimize your risk and earn decent profit. 

Conclusion:


In this article we have covered 7 reasons to start investing in stock market. Investing in stock market is risky but returns on investment is also very high. I think investment in stock market is the best way to achieve financial freedom. If you are agree with us write yes in comment box.  


Post a Comment

0 Comments