Why to invest in stock market?

A lot of people question, why to invest in stock market? However, the real question should be why not to!

Over the years the myth of the stock market is a gambling game has faded away. Now a lot of people are drifting away from the traditional investment options like fixed deposits, real estate, gold, etc, and moving toward the stock market.

So, let us have a look at the reasons to invest in the stock market.

Why to Invest in Stock Market

The increasing trend of the stock market has influenced not just the millennials but people of every age.

There are various reasons why you should also ditch the old, traditional methods of investing and rather invest in the stock market for better benefits.

Let us have a look at some of the major reasons why you should invest in the share market.

1. Minimize the Inflation Risk

Inflation is a common phenomenon in the economy and often affects the return of an individual. The stock market is said to keep pace with the inflation rate and beat it. If you pick the right stocks you can actually get great returns even when there is high inflation.

The equity market serves as the best example. The stock market always stays a step ahead of the inflation rate. The average return that the stock market can generate in a year is almost 10% which is far better than the average annual rate of inflation.

2. Grow with The Business Cycle

The economic cycle goes through variations and does not stay the same always. The changing economic cycles also affect the stock prices.

So whenever the economy is in the expansion phase or growing immensely, there are better opportunities for the company. This creates a direct impact on the stock prices as well.

So, if you figure out the stocks that are in sync with the expanding economic growth, you can get great returns in a long run.

3. Earn With Compound Interest

Understanding how stock market works helps you in understanding the way of making a profit from it.

No doubt! The stock market works wonders in giving great profits because of the idea of compounding attached to it. So if you invest in the right stocks, you can actually earn money in the share market and much more than any other investment option.

Let us understand this with the help of an example. Suppose you invested ₹1,00,000 in the first year and got a 10% yearly return on the same.

This means your amount is now, ₹1,10,000. So the return will now be calculated on the new principal amount which is ₹1,10,000. If you generate a 10% return in the second year as well, the amount will now be, ₹1,21,000.

So, in this way you get great returns from the stock market.

4. Diversify Your Investment Options

It is always advisable to invest your money in different options so that the risk of one place is mitigated by the other. Although, there are various stock market risks as well, if the right strategy is used, you can reap great returns.

You can divide your money depending on your financial goals, capital, and the risk that you are willing to take.

5. Earn From The Falling Market

Now you must have heard that the stock market can fall or go down anytime. Whereas this is partially true keeping in mind the volatility of the market, there is no need to fear the same.

The simple way of earning in the stock market is to buy a security at a lower price and then sell it for a higher price. But the stock market gives you a chance to earn even when the market is moving in the opposite direction.

This process is short-selling. Here you can sell the shares first at a higher price and when the market falls and the prices reduce, you can purchase it again. So here, the difference between the selling and buying price is your profit.

So, now as you can see that there are various reasons why you should start planning your stock market investments now. Let us now have a look at the ways in which you can invest your hard-earned money in the stock market.

Ways To Invest in Stock Market

Is share market profitable? The answer to this is Yes, it is but only if you follow the right rules and strategies. Now looking at the profitability of the share market a lot of people are drawn to the idea of investing in the same. So, let us now look at the different ways in which you can invest in the share market.

The first step is demat account opening. Without a demat account, you cannot start your investment journey.
You can further analyze the stocks and make a decision of picking the right one. You can do technical analysis for intraday trading and fundamental analysis for delivery trading.
Use the trading platforms provided by the brokers.
You can also avail the facilities of PMS or portfolio management services for managing your investments properly.
Apart from this, you can also consult a financial advisor and get tips to invest in the right stock.

Now, there are various investment options in the stock market as well. Let us have a quick look at the types of investments.

If you are looking to invest in the share market and earn great investments then there are various types that you can look forward to.

Here is a list of the different investment options in the share market.

Equities- There are various companies listed in the stock market. You can trade effectively in the stocks.
Commodities- There are various agricultural, non-agricultural commodities that you can invest your money in to earn great profits. The most famous commodities are crude oil, gold, silver, etc.
Currency- Not just the equity and the commodities market, but you can also trade in different currencies and earn great profits.
Mutual Funds- If you don’t want to invest directly in the stocks, you can choose a mutual fund and get great returns on it. Some mutual funds are capable of giving up to 60%-62% return in a year.
SIP- SIP or systematic investment plan is also a great way to earn money in the stock market wherein you can invest a particular amount in a month and good returns on it.

You can plan and start your investment according to your needs and financial goals.

Conclusion

Gone are the days when people used to get contented in minimum returns. The is an increasing interest in the stock market and the reasons for the same are many.

You can earn great returns, mitigate your risk, avoid the drawbacks of inflation and much more. So when wondering why to invest in the share market, always remember the profits that it can give you.