Investing in Stock Market – The How’s, Why’s, and the Why NOT!

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"Know What You Own, and Know Why You Own it."-Peter Lynch

We come across many individuals who know the price of everything and value of nothing. Every hard earned penny of yours must receive an interest that appreciates its worth. With rising inflation and increasing periods of volatility investing in fixed deposits is just not enough. Investing in stock markets is a fantastic way to grow your wealth. Having an ambition is a start but that alone is not fruitful; Information, Knowledge, awareness are all excellent virtues to have while one begins to invest.

Stock market speaks its own language without being familiar with it everything would start sounding Gibberish!

For learning how to trade stocks, you do need to understand the stock market, and at least some basic information about how stock trading works. Beginners can get started by creating an online investment account. They can invest their money in stocks through this account. Human beings are curious by nature, and so it is imperative that we have a look at the Why's and the How’s of investing in stocks. Today we will be looking at the WHY's to make the HOW's easier to understand.

There are at least a hundred reasons to enter the stock market. First of all who doesn't want to see their money grow, be it in your account or on your money plant? Stock market can become your money plant if you know the right time and stock to invest, making well informed decisions, and be aware of the latest trends and risks. Although that might sound too much work, but it is definitely worth all your time.

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So read on to the - 4 best reasons to invest in stocks:

1) Hassle-free nature:

With the rise of digital age, we have come to a point where you come on board without stepping out of the comfort of your house. No standing in long queues, no carrying of documents, no waiting for your turn. There is convenience at every step of the process. Your KYC, registration, and authentication can be done online.

If knowledge is the tool you are looking for there is a shop at every corner of your browser.

2) Staying one step ahead: of inflation

Inflation was never ever fun; even in textbooks. Even with the rise in inflation stock markets allows you to earn money.

Imagine that you invest some 100 Rs that gets you 104 Rs at the end of the cycle with 3 to 4 percent interest rate but the inflation rate is 3%. In that case, what you end up getting is 101 instead of 104.

The higher the inflation rate the minimal is your return. But, evidently the stock equities have kept up with the inflation rates throughout our history. Hence, it is crucial to make an informed investment in the stock that will outperform the inflation rates

3) The Might of Compounding:

If one decides to invest for a long period that will compound the interests, they will relish the benefits and reap high rewards for their perseverance. If one does not disturb its stock investment in its tenure, only they will get the true value of their stock's growth.

Albert Einstein famously said, "Compound interest is the eighth wonder of the world. He who understands it, earns it…he who doesn’t… pays it.”

I think we should leave it at that!

4) Land of Diversification:

Diversification of stocks is always a sensible choice and let us tell you why; Diversifying your stocks is not only the safer option of balancing your returns, but if something bad happens to a stock, it saves you from losing too much.

A recent article in Business Standard stated that out of India’s 1.36 billion people, a mere 3.7 per cent invest in equities, compared to about 55 per cent of the population in the US. Investing in stock markets is beneficial as money can be immediately liquidated when needed unlike in traditional real estate investments and also gives higher returns than traditional gold investments.

There is a rapid increase in the value of stocks every week. It has always been said that the future of investment is trading in stocks. This ladder has only one way to go, and that is upwards.

A Final Word:

Stock Markets are exciting, interesting and rewarding but, they are not your usual markets of fruits and groceries; It requires you to be aware, always mitigating your risks and rewards, making well informed choices, and being a patient investor and an active agent all at the same time.

So, Conduct an in depth research and then step out into the bright and shining sun of the market, It would certainly produce the best walk you have ever had.

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