The Top Five Biggest Stock Market Myths
Investors in India have been approaching the share market with caution and hesitation, the major reason behind this being the various myths and misconceptions about the share market. These myths tend to keep potential investors away from the market, thereby losing out on a great opportunity for their finances.
If you too are considering investing in the stock market but are held back by these myths, here is a look at how these myths are false:
1. Stock Market Investing is Like Gambling:
The comparison of the stock market to gambling could not be further from the truth. While gambling concerns itself with winning or losing by chance, stock market investment is driven by many factors including the market history, the present economic conditions and information about the company you want to invest in. Unlike gambling, these factors are not random and can be studied and predicted to make profitable investments.
2. The Stock Market is Exclusively for Experts
Investing in the share market is not reserved for a select group of people, anyone can participate in the stock market and make the most of its benefits for wealth creation. Investing in the share market requires an understanding of the market and identifying the right shares. But, this process of learning is continuous and develops over time. The share market favours preparation and is, therefore, open to anyone with a keen interest in the market.
3. You Can Only Make Money By Investing A Lot of Money
This myth stems from the belief that to make profits, one must have a lot of financing to survive the losses along the way which isn’t true. The share market offers opportunities for traders with a variety of risk appetites and capital. After opening a trading account, you can invest in shares for as low as Rs. 10-50. The key is to recognise the right company shares through research and to develop a strategy to minimise your losses from the beginning.
4. High Risk Means High Returns in the Stock Market
Certain high-risk investments in the stock market indeed prove favourable to certain traders. However not all high-risk investments equal high returns all of the time. In truth, high-risk investments carry just as much chance of losing as they do of winning. It requires caution, patience and research to find a high-risk investment that you can place your faith and finances in.
5. You Should Just Try My Hand at Stock Market Investment
People might feel inclined to invest in the share market based only on the few suggestions and recommendations they might receive from friends and family. However, to truly profit from the stock market, an investor should spend some time doing a fair bit of research, from understanding the market and the current economic trends, to formulating strategies.
Stock market investments require their share of homework and preparation. Once an investor can overcome these, they can utilise the wealth creation potential of the market. All it takes is to get started on research, develop some simple strategies and open an online trading account and Demat account to start investing.