Is It Safe To Invest In Stock Markets ?

 In Stock Market For Beginners

Is It Safe To Invest In Stock Markets ?

Having heard the rags-to-riches story of ace Indian investors, many individuals are drawn to investing in the stock markets today. While awareness about the Indian stock markets has grown, there are still investors who lack the knowledge to brace the volatility associated with this financial instrument. Many of these investors even view the stock market as a ‘get-rich-quick’ scheme, while for others, it’s a place where profits can be made when stocks go up, i.e. perform well. That’s it.

But there is more to the stock markets than just the stock prices going up and down. Indian stock markets have become quite accessible lately for the common investors too and it provides the latter with some amazing advantages and opportunities. In short, Indian stock markets can help individuals and small investors build wealth.

Here are some reasons why investors must invest in stock markets:

Start with a small amount

To start a small business, an entrepreneur would have to invest a substantial amount of money at once and with a lot of risks involved. However, when you buy a stake in a business listed on the stock markets, comparatively, the risk involved is minimal. This is to say that investors can start with a smaller amount and buy a few shares. Over time, you can invest more and purchase additional shares to increase your holding in the company.

Liquidity

Today, technology has not only made ordering food online an easy task, but also placing order for buying and selling stocks a seamless process. Investors can buy and sell stocks online with just a click on their mobile phone, this minimizes the efforts on the investor’s part.
For instance, when you place the order to buy a stock, the order amount is debited from your account as soon as the stock hits the target price and simultaneously the stocks are credited to your account. Similarly, when you place an order to sell the stocks, the shares are debited from your account when they hit the target price and the amount is credited to your account in 2-3 days. Thus, making stocks a very liquid investment instrument.

Getting a stake in profitable business

When you buy a stock of a company, you are purchasing a stake in an existing business, which has huge advantages. The main advantage is that since these businesses already have an infrastructure in place and are already up and running, one can earn from said businesses’ future profits without having to get involved in its operations.
Another advantage is dividends. Each year, listed companies share the fruits of their efforts with the investors in the form of dividends. These dividends can be given to you in the form of additional shares or as a certain amount per share. For e.g., if the business you invest in announces dividends at Rs. 10 per share and if you have 1,000 such shares, you will receive Rs. 10,000 in the form of dividend.

Choice of investment

Investors have the ability and freedom of investing in stocks that are likely to provide them maximum returns on investment. For e.g., investors would love to find the most profitable business being sold at the lowest price. The stock market is a place where investors are enabled to make such choices.

Easy negotiations and lower brokerage

Stock prices may go up and down but you would never have to go through the hassle of negotiating with the opposite party. You can even pick a brokerage house that charges lower brokerage for running your trades. A lower brokerage helps in ensuring that a substantial part of the investment is not lost in paying additional fees.

Higher returns

The main reason why investors invest in stocks rather than in other investment avenues such as fixed deposits, is for the higher returns on investments. Businesses usually tend to give returns that are much higher than regular investments. Hence, it is prudent for investors to conduct diligent research and buy a stock that can perform well, which is stable and is being offered at a reasonable price.
To answer the question at large: yes, it is safe to invest in the Indian stock markets; however, as with all investments, one must research and plan accordingly. Without proper research and planning, investors tend to make unwise decisions that eventually lead to losses. This is not the ideal way if you wish to reap the benefits of the stock markets.

Investors need to understand the stock as well as the business they are investing in, evaluate its performance history, and understand the risks involved before making any moves. Only then can investors expect to make money in the stock markets. Happy investing!

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