7 Reasons Why You Should Invest In The Stock Market
Why Invest Stock Market?
7 strong reasons
In the previous write up we understood the myths about stock market and why this could be the reason for less than 3% of the Indian population to actively invest in the stock market.
Hence, today I am going to give you 7 strong reasons to break this barrier and consider investing in stock markets.
- Beat inflation:
Inflation is a rise in the general level of prices of goods and services in an economy over a period of time.
When the general price level rises, each unit of currency buys fewer goods and services. Therefore, inflation also reflects an erosion of the purchasing power of money.
According to Geoffrey Crowther, “Inflation is State in which the Value of Money is falling and the prices are rising.”
In Economics, the word ‘inflation’ refers to a general rise in price measured against a standard level of purchasing power.
The inflation in India for the last few years has been around 4-5%. The return on the saving account (Interest rate) is around 4-6% per annum. Hence, a saving account or a conventional investment method won’t beat inflation. Overall, if you want to beat inflation, you have to invest your money intelligently. And the stock market is the best place for intelligent investors. If you buy stocks of decent companies, you can easily get a return of between 10-25% depending on how good the stock is and when did you invested or how you have chosen the stock. Therefore, investing in the stock market is a great option if you want to keep pace with the rising inflation.
- High growth potential:
For the past couple of decades, Stocks and real estate are the two investments, which have constantly beat other forms of investment. Whether it is bonds or commodities like gold, silver, petroleum etc. of late the real estate market is stagnant, having a huge inventory with developers, that makes the Stock market one of the best investment ideas as it has been able to outperform all these investments with the best returns on the investments. Hence, with the tremendous growth potential in the stock market, it is always advisable to invest in stocks.
Having said this the decisions about your money must be made by you..the best way to do that by learning the stock analysis to understand those opportunities better.
- Investing makes your money work for you:
Money is important. We need money in every aspect of life. Most people say that they do not work for money and money is the cause of most problems. However, lack of money is the cause of most problems and investing is the solution to this problem. If you invest your money in good companies, you just have to sit idly and do nothing. Your money will grow itself as the company prospers. In the meanwhile, when your money is growing by itself, you can use your time in whatever way you want. In this way, you can make your money work for you.
- Stock Investing takes as little amount as a family lunch in a restaurant :
There is a common misconception among many people that they need a huge sum to start investing in the stock market. However, that is not true. You can start investing with as little money as required to buy a family lunch. There are a number of stocks whose price is less than Rs 2000 to 3000. You can invest even very small amount of money and start getting good returns. This option is not available in other forms of investments like gold or real estate. In addition, remembering a few things every day adds up to a big result.
- You do not need to be a genius to invest in the stock market:
‘If you can understand 5th standard math, then you can understand stock market’- Peter Lynch.
Lynch is one of the most renowned fund managers famous for giving around 30% return for a continuous period of 13 years at Fidelity. He always motivates common people to invest in stocks and believes the stock market is for everyone. You do not need to be a mastermind or rocket scientist to invest in the stock market. Unlike starting most business or start-ups, the stock market requires only a little money, math, time and interest. Anyone can get huge returns by investing in the stock market.
It is easy to invest in stocks in India now and hardly requires any expertise to buy stocks online. Trading with the online brokerage account is a lot simpler now. Moreover, with Trade plans taught by Growth Module
- To create a secondary source of income:
Our education system is helping us choose the career of our choice or expertise, which enables us to work in that field of specialisation by means of Business of job. In this process it happens so that we are devoted to our work, we hardly have any time and expertise to make our investments work intelligently and create a passive source of income.
Investing in the stock market can be their second source of income. Through the value appreciation and dividends, they can steadily grow additional income. That is why people need to start investing in the stock market.
- The power of compound interest:
Stock Investing allows you to take advantage of compound interest, which grows your wealth exponentially. Most of the bank savings account gives you a linear simple interest. However, with investing in stock, you can get compounded returns. The famous scientist Albert Einstein once said- “Compounding is the eighth wonder of the world”. The world greatest investor, Warren Buffett, is known to have a compounded return of around 22% for the last 5 decades. Moreover, this compounded return for a long time has made him one of the richest men on earth. The power of compounding is one of the major reasons why people should invest in the stock market.