One of the primary benefits of investing in the stock market is the chance to grow your money. Over time, the stock market tends to rise in value, though the prices of individual stocks rise and fall daily. Investments in stable companies that are able to grow tend to make profits for investors.
Everybody wishes to become wealthy and have enough money to live life happily. However, only a few succeed to gather the wealth, for rest it seems to be a difficult proposition especially for a working professional who receives a fixed income on a regular basis. In this income, we have bills to pay and manage savings for preparation of retirement or any other financial goal. So, we start saving them – using a bank savings account, fixed deposits (FDs), recurring deposits (RDs), etc.
Know what Warren buffet says about investing? Follow discipline. The multi-billionaire is known to spread the gospel of discipline wherever he goes which he claims to be the sole reason for his success in the investment business. Discipline refers to standard processes of selecting stocks, making careful evaluations and going by logic when your mind pulls at making decisions based on impulse. A disciplined approach to stock trading is taught as the first lesson in any guide to Indian stock market.
We have to become Successful Independent Trader we can learn managing our risk very well. The knowledge about Stock Market will not be useful unless we practice our skills and improve our trading skills. Generally, our idea of getting rich quickly in the stock market will convert into “small but consistency earning”
Here are the reasons why people invest in stock market:
- Wealth Creation
- Future Opportunities to own
- Portfolio diversity
- Minimizing loss
- Easily accessible money
- Combating risks
- Added benefit of dividends
Wealth creation
In its very essence, investing in shares is about accumulating and multiplying wealth. The most basic tip about how to invest money in the share market that traders follow is ‘buy low, sell high’.
Another share market basic for wealth creation is investing for the long term. This is because businesses go through a lifecycle, and investors need to give their shares enough time for value creation. This is possible only if they stay invested in a particular stock over a period of time.
Opportunities to own
Buying shares of companies implies that the investor owns a part of that company, thereby allowing him to enjoy the profit that the company makes. The part of the company owned is equivalent to the percentage of shares that he has purchased. As a partial owner of the company, he will be kept informed about company news and updates.
Portfolio diversity
Investing in shares adds diversity to the investment portfolio. The portfolio could now give investors several sources of income – from real estate, stocks, interest earned from bank accounts apart from his chief source of income.
Minimizing loss
The Indian share market comprises a number of companies, enabling investors to distribute their investments rather than committing all their resources into one. If the losses of one company lead to the depreciation of some of their shares, the successes of the other would help balance out their losses.
Easily accessible money
The money put into some types of investments, such as fixed deposits, cannot be accessed until the investment has matured.
In contrast, buying shares allows investors to sell them at any time, without a limit. The amount resulting from this transaction may be easily transferred to their bank accounts.
Combating risks
The primary fear when it comes to trading in the share market is unexpected losses. This may be overcome through stop loss, a feature that enables investors to give a mandate to their brokers about a specified price limit. If the value of their shares falls below this limit, they will be automatically sold, thereby saving them from incurring great losses.
Added benefit of dividends
A dividend is the payment that investors receive from the overall profit that a company makes. This amount may be paid in the form of money or more shares. It is important to invest wisely and choose a company that is trustworthy, because paying dividends to investors is not compulsory. However, most multinational corporations and established businesses do offer dividends, as this widens their shareholder base.
