Top Reasons Why You Should Invest in the Stock Market: Some people want to invest in Stock Market but another side they are afraid to do so. The main reason behind that is our society and the people around us. In India, only about 3% of the population invests in the stock market
When you take the name of the stock market in front of your family, friends, or relatives, They start giving examples – my uncle lost 10 lakhs in the stock market, my friend lost all money in the stock market.
They understand that the stock market is nothing but gambling.
Our family members, friends, relatives, and media suggest we stay away from the stock market/share market. Due to this reason only around 3% of people in India invest in the Stock market.
Many people are interested in investing in the stock market but hesitate due to fear. This fear often stems from negative stories shared by family, friends, or the media, portraying the stock market as a risky gamble.
I am going to clear your all doubts regarding stock market investment. Take a deep breath and let’s go.
If you are new to the stock market then you can check this article it will help you.
Why You Should Invest in the Stock Market?
Reason 1: To beat the inflation
Inflation is a serious problem for everyone. What is inflation- Inflation is the state where prices are increasing and the purchasing power value of money decreasing.
The stock market is always a good option to beat inflation. Inflation eats all your savings and purchasing power of money. Example – If you buy a burger for 150 Rs then its value may increase to 170 Rs next year.
If you invest in FD then they rarely beat the effect of Inflation. The stock market has historically provided returns that outpace inflation over the long term. For instance, the Indian stock market has delivered an average annual return of around 12-15% over the past few decades [source].
If a burger costs 150 Rs today, it might cost 170 Rs next year due to inflation.
Reason 2: If you invest, money works for you
Some people say that money is not important. And those people also work for money in a 9 to 5 job. But money can be a great tool for your freedom. Money can be a great solution to your problem.
Some people say that it is very difficult to earn money. You have to do very hard work to earn money. They are correct but you can make money easily by investing money in good companies. If you invest money in good companies then you do nothing.
For example, if you invest money in an Apple company then legally all staff will work for you you have to do nothing. Your money will grow by itself. You can experience financial freedom. In that way, if you invest, the money will work for you.
Reason 3: You can start with little money, as money is required to buy Pizza.
There is a myth in our society that if you want to invest money in the stock market then you require a huge amount of money. That is not true. You don’t need a large amount to start investing. There are so many stocks whose price is less than 100 Rs.
It is always good to start investing with less amount. In the initial stage, you can start by risking a small amount in the market.
Similarly, if you want to invest in Gold or real estate you require a huge amount as compared to equities. You know that little, little efforts make a big difference.
Reason 4: You don’t need to be a Genius. You don’t need to be a rocket scientist.
Some people say that the stock market is very difficult to understand. But when you come to the stock market field you will know that you don’t need to be a rocket scientist. When you start another startup you require more capital more time more knowledge. But in the stock market, you only need a little money, math, time, and interest.
If you can understand fifth-grade math like addition, subtraction, multiplication, and division then you can easily deal with the stock market. Only you have to give sufficient time and proper research.
Reason 5: Stocks are easy to invest in
In the world of the internet and technology, today investment and trading platforms have become powerful and a lot easier. If you want to buy any share today it is one click away from you.
You don’t need too long paperwork, no need to wait long to open a Demat account. Everything is on the internet today.
You can trade with discount brokers. They offer low brokerage charges.
You don’t need to wait for newspapers/newsletters to study company financials and reports. Everything you will get on the company website or on the financial websites.
Reason 6: Less tax deduction
Earlier there was no tax on the long-term capital gain in India. After budget 2018 long-term capital gain tax is 10% if profit exceeds 1 lakh.
This is less than FD Investment. The average return on FD is around 6%, in today’s condition, it is less than 6%. Tax deducts from 10% to 30% depending upon from tax slab of the investor.
Reason 7: You can create a second Income source
It is good to create as many income sources as possible. But today people are busier with their recent work. They can create a second income source by investing in the stock market.
Reason 8: Power of compounding
Albert Einstein said, “Compound Interest is the 8th wonder of the world.”
For example, if you invest 10,000 Rs at an annual return of 10%, it will grow to approximately 25,937 Rs in 10 years.
“My wealth has come from a combination of living in America, some lucky genes, and compound interest.” – Warren Buffett.
But when you invest in a stock market or mutual fund then you can grow your wealth very amazingly with the help of compound interest.
Reason 9: Invest in Retirement plans
When you become old you can not do that much potential work. So it is very important to save money for your retirement to live a financially free life. But I mentioned above that saving money in a savings bank account is not a good option, so invest in the stock market for financial freedom in old age.
Our elders always say to save money and invest money for your future.
Reason 10: Invest in Dividend stocks for a steady income source
When you invest in some dividend stocks then you can create a constant income source.
Dividend income is so special because it gives you cash directly in your bank account.
Dividends of these stocks range from 1% to 10% or more.
There are so many other advantages of investing in the Stock market. You realize when you practically start investing money in the stock market.
Disclaimer – This information is for knowledge and education purposes only we not forcing you to make investments in the stock market. Before starting investment research all aspects of the stock market. Before starting investing take advice from your financial adviser.
What are your thoughts on investing in the stock market? Do you have any experiences or tips to share? Let us know in the comments below!
Happy Investing!
FAQ on Why You Should Invest in the Stock Market?
Is the stock market gambling?
No, If you do proper diversification, and research then the stock market is not gambling. The stock market needs patience.
How much to start?
You can start with a monthly SIP of about Rs. 500 in funds such as Nifty Bees, or invest a lumpsum of around Rs. 5000, or even begin buying stocks at approximately Rs. 100 each.