Most people at some time have thought to start investing in the stock market. Their reasons to start investing may be different, yet the final goal is always the same “To make money”. However, because of some myth or misconceptions that they heard from their Uncle or close kin, they were afraid to take the next steps.
For a very long time, our family members, friends, and news channels have told us to stay away from the market. The common misconception that ‘Stock investing is like GAMBLING’ has become more of a fact than a myth for many. And maybe this could be the reason why even less than 3% population of India is actively investing in the stock market.
Today, we are going to break the barriers. In this post, we are going to discuss 10 great reasons to start investing in stock market. Therefore, be with us for the next 5-6 minutes to enjoy this roller coaster ride that may open your eyes towards investing in stock market.
1. To keep pace with inflation
Inflation is defined as a state where the prices are rising and the value of purchasing power of money is decreasing. Inflation occurs in an economy when there is an expansion in the total amount of money. Overall, Inflation is not desirable for a common person.
Let us understand inflation with an example. Suppose you have Rs 5 lakhs in your account and you want to buy a car, which also costs Rs 5 lakhs currently. However, you changed your mind, deciding to buy the car next year, and kept your money in the savings account.
The bank is giving you a decent interest of 3.5% pa. Now, let us fast forward to next year. You went to the bank and came home happily with your money that has become Rs 5.17 lakhs now. Next, you went to the car showroom. But boom! You get the shock.
2. Most Capital Growth Potential
For the past couple of decades, Stocks and real estate are the two investments, which have constantly beat all other forms of investments in India.
Whether it is fixed deposits, insurances, bonds or commodities like gold, silver, petroleum, etc. the stock market 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 for those who want to grow their money.
3. Investing Makes Your Money Work for You
Money is important to buy comforts and in all other aspects of life. Most people say that they do not work for money and lack of money is the root of most problems. However, 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 as the company prospers. In the meanwhile, when your money is growing by itself, you can use your time to focus on your primary job or in whatever way you want. In this way, you can make your money work for you, unlike your primary job where you have to work for money.
4. Stock Investing Requires As Little Amount as buying a ‘Burger’
There is a common misconception among many people that they need a huge amount 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 burger.
There are a number of stocks whose price is less than Rs 100. You can invest very small amount of money and start getting good returns. This option is not available in other for other forms of investments like gold or real estate. In addition, remember a little bit of things every day ads up to a big result.
5. You do not need to be a ‘Genius’ to invest in Stock Market
Peter 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 inspires 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 stock market.
Unlike starting most business or start-ups, the stock market requires only a little money, knowledge, time and interest. Anyone can get decent returns by investing in the stock market.
6. Investing in Stocks is lot easier ‘Now’
Investing and trading with the online brokerage account is a lot simpler now. Now with the help of leading online brokers, you can buy and sell stocks within seconds using your smart phone.
Moreover, with the increase in financial websites and apps; finding and selecting stocks is also simpler. You do not need to go through all the boring financial newspapers and magazines now and need not rely on newsletters to get the company’s financial reports now.
7. Tax benefits from Government on Stock Investing
There are a number of tax benefits in investing in stock market. The long-term capital gain tax is 10% for gains exceeding Rs 1 lakh. Still, this is better than the return of 6.5% from FDs, which is again taxable up to 10-30% depending on your tax slab. That’s why it is a popular quote ‘The rich pay less tax’.
8. You do not Always have to Pick Hidden Gems.
There are a number of other examples of common stocks as well that has given more than several hundred percent returns over the last few years. For example, Asian Paints, Hindustan Unilever, HDFC Bank, Symphony, Maruti Suzuki, Titan Company, etc. These companies are well-known to the common people. People can easily find such growing companies around them as they are already using their products.
In short, you are not always supposed to find a hidden gem or a very rare/unheard chemical stock. You just have to look around and find leading companies with amazing products and invest in them.