Whether or not investing in stocks and share market is profitable depends on your goals and the options accessible to you. If you are willing to take on risk, investing in shares allows you to profit from rising stock prices and dividend payments. Market volatility is unavoidable, and the worst moments are when the best investments are made. Let’s look at some important reasons why investing in the equities markets right now is critical.
Reasons to invest in the stock market for a new investor
- Flexibility
The stock market offers many financial products, including stocks, bonds, mutual funds, and derivatives. This gives investors a broad range of options in which to invest their money. This flexibility not only provides investment options but also helps mitigate the risks associated with stock investing by allowing for portfolio diversification.
- Higher liquidity
The Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) are two major exchanges in India’s stock market. Most corporations trade their stock on one or both of these markets. Due to the high average daily volumes, investors benefit from increased liquidity. As a result, whenever an investor wishes to purchase or sell any goods on the stock exchanges, this liquidity facilitates the process.
- Higher returns in shorter periods of time
Compared to other investment products such as bonds and fixed deposits, trading stocks offer investors the opportunity to earn higher returns in shorter periods of time. Adhering to stock market fundamentals such as trade planning, implementing stop-loss and take-profit triggers, conducting research and due diligence, and remaining patient can greatly reduce the risks associated with stock investing while increasing profits on share market investments.
- Regulatory Environment and Framework
The Indian stock market is overseen by the Stock Exchange Board of India (SEBI). The SEBI is responsible for regulating stock exchanges, developing them, and protecting investor interests. This means that when investors invest in financial instruments traded on the NSE or BSE stock market, their interests are adequately protected by a regulatory framework. This considerably contributes to reducing risks associated with corporate fraud.
- Returns that outperformed inflation
The primary cause of volatility is the rise in interest rates. To contain inflation, central bankers have chosen to use their tried-and-true technique of raising interest rates. While volatility may fall, investors must remember that inflation is their number one opponent. If you select the right stocks, you can outperform inflation in the long term. Long-term compounding works to your benefit to deliver returns that surpass inflation, and this also applies to well-managed portfolios.
Even if there are valid reasons not to buy stocks and sell equity shares, the majority of people believe the upside potential outweighs the danger. As a result, buying in stocks is virtually always a wise decision, even when the market is at an all-time high. Studies suggest that investor patience is more crucial than market timing. The majority of earnings come from equities in a relatively short period; therefore, waiting to buy them at the correct time can be pricey at times.
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