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Why should you Invest in Stock Market? How safe is it?

 


Hey, don’t you know it is not safe. Its fraud.”

“Your money will be lost, its not our cup of tea. It’s a scam”

“Beware, I know people who lost money there.”

These are some blind advices you will get when you invest in Stock Market, especially in India. With all due respect, I am not defaming India for this but it’s a fact. I personally experienced this. On the contrary, there are so many people here that support you who are well aware of the potential benefits of trading in the stock market.

Yes it is true, you can lose money there. But you can also make profits. These advices are good to some extent, but one cannot be prejudiced about it.

Like all other good investment opportunities be it fixed deposit, gold, or even real estate, stock market investment is also a viable and profit-grossing option. And this comes under the “Must Try Investments Option” if you are planning to actually multiply your wealth within any time period of your preference. 

The case with Stock Market is you cannot invest in it without basic knowledge. In fact, one should never start investing in the stock market without doing adequate research and planning. Otherwise, the above advice will turn out to be facts in your case and you will end up losing money.

Do some researches and study the basics of the stock market. Nowadays, we are just a fingertip away from the vast sea of knowledge as Google, YouTube, and other means are open to you on your mobile and PC.

To know about Stock Market and its working read my previous article about it. (read here)

Why should you Invest in Stock Market?


The basic reason to invest is to multiply our wealth or in other words to increase our savings. To attain the goals I have mentioned above, we have multiple options. Like FD, gold, property, etc. The amount of technical knowledge required to invest in such options is minimum to nil compared to what is expected in stock market investments.

The first and foremost thing to be kept in mind is that investing in the stock market is a way to grow with your country’s economy. Because the stock markets in a country are listed with companies that are having business in that country as well as other countries. So, the stock market can always be correlated to a country’s economy and acts as an index of the economic stability, GDP, jobs, and all other such factors and react to it.

Moreover, the stock market allows us to take pride in being a small investor in leading and reputed million-dollar companies, how fascinating…isn’t it?😉

One other interesting example and experience I can give you is us getting a part of the profit from the company that we depend on and purchase some products or services.


For example, consider you are using a Jio sim and recharging a 500 rupees plan every 3 months. If you could buy some Reliance Industries Limited (RIL) shares that are affordable for you, as the company progresses the share price increases and you will be reaping some profits. The hidden thing is you are also a person who is helping Reliance progress by using a Jio sim and you are getting a part of the company’s progress from the shares you hold.

To know key points of 44th Reliance AGM read here

If your thought processing is similar to the above scenario, it’s a sign of good investor. Because at this point you realize that it is good to invest in companies that produce products or give services that you and most of the people you know depend frequently.

Also, your style of purchasing starts to change, because you will start to check the products to find out their manufacturers and whether you have a share of the company. I can give you another scenario for this.


Consider that you like Maggi noodles and you purchase it sometimes. Maggi is the product of Nestle which is having a high stock price. Consider you cannot afford Nestle so you bought ITC. Now that you have ITC share you may think to buy Yippee noodles which is an ITC product. Thus, you ensure that you are helping the progress of the company you hold to get some profit.

Trust me…. You will think like this if you become serious in the stock market and start investing. So, a stock market investment actually allows you to have a different perspective in life and gives you a chance to make your investment grow more by your actions itself.

Apart from these scenarios depicted above it is not that much easy to invest in the stock market as you need to be technically good to understand the charts and do your analysis and to do the fundamental analysis about a company to understand its future potential.

It is not easy to be good in the stock market but it is not that difficult either. All it needs is some effort and dedication and a will to study the basics. Also, by applying some common sense and staying up to date with the market trends by watching the news and analyzing it, you can easily pick some stocks.

If you are less interested in being a think tank with your savings in the stock market, then you can consider Mutual Funds. There a brilliant fund manager will intelligently use your money to get you a good profit. The only thing is you have to pay a good amount as commission. Even with that also a mutual fund returns are highly appreciable.

Is Stock Market Safe?


YES! We know. The main reason that there is a belief that the stock market is not safe is because of some infamous scams like the Harshad Mehta scam 1992, Satyam scam, Karvy scam, etc. and some corporate frauds like Vijay Mallya, Nirav Modi, etc.

All these are facts and cannot be hidden. Yes, there are risks, but we cannot generalize it as unsafe because of some rare mishaps. In fact, such scams have forced us to implement stringent regulations to reduce the risk of investors, making our markets, a safer place to invest.

The Securities and Exchange Board of India (SEBI) is a regulatory board under the Ministry of Finance in India for securities and commodity market in India. So, things are not light here. SEBI monitors the stock market, its activities, and its participants. It amends and creates new policies and rules for the smooth and safe running of the stock market in India. We cannot ignore the fact that SEBI is one of the most stringent and secure regulatory compared to all other countries. The more recent GameStop fiasco that shook the US Markets will never happen in our country due to the strict policies and rules SEBI has put forward.

Like SEBI every country has its own regulatory board for safeguarding the securities and commodity market. Therefore, the word unsafe is not apt in the stock market.

It is the inexperience of investing in the stock market without understanding it, that leads to your failure. Not all stocks are good to invest in. The time and price range to invest is also a factor. Not all stocks which are having a very lower price can go up. Also, not all stocks having a good price can go up only, it can plummet with any warning.

Understanding these things are what we need to figure out which can de be done by some dedicated studying and researching. Watching the stock market or some specific scrips also gives an idea.

A lot of groundwork should be done with great commitment and dedication but eventually, it will pay off. Yaa… it's your hard-earned money that you invest so no problem for dedication and commitment, I guess.😜.

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Disclaimer: I am not a SEBI registered analyst or a highly successful investor. I am a beginner still studying about it. Decisions you make are solely your responsibility.

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