Investment in assets creates wealth whether it's real estate, gold, FDs or in equities. Keeping your money in the bank account will not increase its value, as there is no significant interest paid by the bank unless you put your money in a fixed deposit or any other long-term deposit scheme. While buying and keeping gold or other precious metals at your home can be risky.
Whereas, if you are looking to invest in real estate or properties, you need a significant amount of money to buy the land or any other type of immovable property. Here, investing in the equities or stock market can be a good option for you. Investing in the share market or equities has multiple benefits, which we are going to discuss today with the top reasons listed below.
Why to Invest in Share Market?
The share market is the place where companies are listed and issued their portion of shares to common people giving them an opportunity to invest and grow their wealth with the revenue and assets growth of the company. Over the past years, people around the world invested huge amounts of money in the stock market. In developing countries like India, in the past decade, retail investors have also become very active in investing in the stock market.
Also Read: Golden Rules of investing in Stock Market
The Indian economy is doing well, since the BJP, BJP-backed government and our PM Narendra Modi leadership came into the governance. Now retail investors have more confidence and assurance in investing in the Indian stock market due to stability and security in the trading system and another mechanism for the smooth running of the market. Hence, we brought here some investment rationales for why you should invest in the stock market.
8 Reasons to Invest in the Stock Market
#1 High Returns in Long-term
If you pick any date compare the return of the stock market in five years or more, since the Indian stock market was established. It has given the highest return compared to any other assets. Though the stock market remains volatile, moving up and coming down, but when you check the growth of indices like Sensex and Nifty or individual stocks of blue-chip companies you will be amazed and regret not being a part of this high-return investment journey.
The revenue and earnings of the company grow over a period, and the price of such companies' stocks also grows increasing the wealth of the shareholders. Not only in the long run, but sometimes stocks of a few companies grow at a very fast speed and can give you a significant return in a short span of time. However, there are certain things and points that need to be considered while selecting the stock or investing in the stock market.
#2 Opportunity to Earn in Short-period
Earning from the stock market in a short period is possible when you can earn profit from intraday trading or invest in stocks or derivatives markets for a short time period. In options trading, you can get one of the highest returns in the shortest span of time.
Though intraday trading and future or options trading are very risky, if you trade with the right intraday trading strategy you can earn good profits. To earn from intraday trading you need to become an expert, have the knowledge of technical analysis and can use the technical indicators to check the buying and selling levels of stock and book profits timely.
#3 Regular Income from Dividend
Apart from the increase in the stock value, when you hold the stock of any company you will be also eligible to get the dividend but only when the company announce or wishes to pay the same. The dividend is paid by the companies when quarterly financial results are declared. From the portion of the net profit earned by these companies, on the face value of each share, the dividend is paid to shareholders who hold shares into demat before a certain period called record date.
However, many companies like construction, engineering, real estate and companies that requires high capital expenditure usually don't pay dividend instead invest the profit into the business again. Companies like FMCG, Pharma and Banking pay regular dividends to their shareholders and owing to high dividend yield the total return on stock also increases.
#4 Highly Liquid Investment
Investing in equities is a highly liquid investment, as you can sell the stock anytime in the stock market during trading hours and can get your money within two days in your bank account. Even recently the stock market regulatory body SEBI has reduced the trading settlement cycle from T+2 to T+1. This means when you sell a share of a company you will get your money next day in your account. This new trading cycle will be applicable very soon.
While investing in real estate, bonds and other debt instruments you need time and a proper buyer to sell and liquidate your investment. High-liquid assets mean you can easily find the buyer and turn shares quickly into cash with low transaction costs. In equities, you can easily find the buyer for most of the stocks regularly traded with nominal transaction charges.
#5 Diversification of Investment
In the stock market, you can choose to invest in equities, preference shares, debt instruments, ETFs and government securities. Here you can diversify your investment into different financial instruments to diversify your portfolio and offset market risks.
Investing in the stock market comes with another benefit called diversification of investment into different companies, sectors and industries. Yes, when you buy the stock of different companies operating in different businesses, then your investment is exposed to different areas. A well-diversified portfolio will increase your wealth by leveraging growth in different sectors of the economy, resulting in overall profit even if some stocks do not increase.
#6 Ownership in the Company
Though, it is very minor shareholding when you buy the shares of a company you also get ownership in the company. You are one of the shareholders of a company and also have the power of voting into the annual general meetings of the company’s management key decisions that are favourable for the growth of the company in the near future.
Being even a minor shareholder of the company, you will also get regular updates about corporate announcements, financial results copies and annual reports directly on your email ID. When you have shares in any company and when a company offers buy-back or FPO, existing shareholders are asked first to participate with some discounts and benefits.
#7 Hedging Against the Inflation
In developing countries, inflation is a natural phenomenon. And if your money is not growing beyond the inflation rates, it means the value of your money and its purchasing power is decreasing. If you keep your money in the savings account it will not beat inflation, even the FDs also not give enough interest to make your investment beat inflation.
Here if you put your money into the stock market, you will get better returns compared to any other assets. This works like hedging against inflation helping your money increase with the increase in the price of the stocks. The share price of listed companies from sectors like technologies, FMCG and pharma usually grow annually giving better returns to shareholders and providing the best option to hedge the value of their money against inflation.
#8 Transparent and Secured
Since the Harshad Mehta scam in 1992, the Indian stock market has been regulated enough by the SEBI and central government that such kind of scams are not likely to happen again. SEBI has regulated stock exchanges like NSE and BSE to operate with the protection of the interest of investors by reducing the risks due to fraudulent activities of companies.
In today's era, with technological development, the stock market operations also become very fast and highly transparent to detect any kind of unusual activity during the market hours. Exchanges are involved in every transaction and keep an eye on the unusual movement of stocks to ensure the protection of investors' interests and ensure transparency.
What are the other Benefits of Investing in the Stock Market?
Apart from the above-mentioned reasons there are various other benefits of investing in the stock market. You can start with a smaller amount, you can choose your quantity and buy from various online platforms. Yes, in today’s technological era, you can find various online trading platforms to invest in the stock market with seamless trading and investing experience.
Compared to earlier, investing in the stock market became easier with various online payment systems like UPI. You can buy or sell shares through apps on a smartphone and keep an eye on your investment or keep regularly updated with stock market news. Here you just need to choose the right online platform to start investing in stocks.
Best Way to Invest Money in Share Market?
If you are looking to invest in the stock market, the best way is to choose the right company providing stock broking and advisory services. You just need to open a trading account and a demat account to start investing in the stock market.
Here you can choose the Moneysukh to start investing in the share market. It is providing one-stop investment and trading solutions to retail clients, HNI and corporate customers to trade or invest in equities, commodities and the forex market.
You just need to open the trading and demat account with the required documents. Once you open the account here, you can get tips and recommendations to buy and sell stocks or book profits. You can also do intraday trading, or trade-in derivatives or invest in IPOs. Here you can also get high-frequency trading services through Algo-trading platforms.
Also Read: Best Intraday Algo Trading Strategy
There is no other best way to start your stock market investment journey, except choosing the Moneysukh. Here you will enjoy trading as well as investing with news and updates to keep you informed about the various activities in the market, at the same time also providing the opportunity to learn about the basics and important things about the stock market through regularly published tutorials and informative articles on Learn Moneysukh.