For the common person, there are a limited number of investment options. The most common choice is a Fixed Deposit for investing in gold by purchasing jewellery. These certainly are reliable investment opportunities with low risk, but their returns are low as well. The Indian Stock Market is a convenient option. The first stock exchange established in India was the Bombay Stock Exchange (BSE) in 1875. Today it’s the 9th largest stock exchange based on market capitalization.
A retail investor would require a stockbroker to carry out trades during its inception. In addition, the whole trading process required a representative to be present at the exchange and place buy and sell orders by physically communicating with other stockbrokers. It will initiate a long and tedious process that could take 2 weeks culminating with you receiving shares or money based on your order.
With the dawn of the internet, trading and settlement of shares got easier. Exchanges moved online, helping stockbrokers carry out trades quicker than before. Investors would contact their brokers via telephone and place orders. In 1992 the National Stock Exchange (NSE) allowed any individual who met the minimum financial requirement to trade. In 1996 electronic storage of securities began giving rise to dematerialized accounts. A Demat account, like a bank, stores various securities in electronic form.
An increase in discount and full-service brokers and the easy trading process have led to tremendous growth in retail investors. Investors can choose from many mobile trading apps based on their requirements. Due to the vast information available to everyone, an investor doesn’t require assistance in choosing what to invest in. The investing process is comparatively easy as all you need is a Demat account and a trading account as the stock market is available at the tip of your fingers.
As an individual, if you are wondering if it is worth investing, here are 5 reasons to invest in the Indian Stock Market.
The basic reason for investing in any asset is to get some kind of return. The average returns provided by the stock market have always been higher compared to fixed deposits. The bigger monster to evade is inflation. Historically, the stock market has always provided returns higher than inflation, ensuring that your assets’ value is always more than what it was. The growth potential is huge, especially for intervals that are for decades. The Indian economy is booming, with predictions stating it could be among the world’s top. It puts the Indian Stock Market in a good position as more investors will invest in it, increasing the returns one can expect.
Different Investment Opportunities
You don’t have to invest in the stock market directly. You could choose to invest through a mutual fund or have someone invest for you. It reduces the burden of investing, as someone else makes investment decisions for you. Apart from this, you can invest in futures and options and Initial Public Offerings (IPO). A few of the upcoming IPOs to look forward to are LIC IPO, Go airlines, MobiKwik, OYO Rooms, Delhivery, etc. One must choose the right investment option based on their risk appetite and the capital to invest in the stock market.
Initial Investment Capital
A benefit of the Indian stock market is that you don’t have to pool large amounts of money to invest. You can invest in multiple stocks, which are pretty cheap. There’s no fixed minimum amount that one needs. You could even start investing in a systematic investment plan (SIP) where you can invest 500 or 1000 rupees a month over a long period and watch compound interest do its job for you.
Power of Compounding
Albert Einstein has rightly said, “Compound interest is the 8th wonder of the world.” If the investing period is pretty long, one can take advantage of compound investing. Over time as your investment corpus grows, so do the returns on it.
One doesn’t need to know any kind of analysis or special techniques compulsorily. One can look at regular companies around them and invest in them. A few examples will be Hindustan Unilever, HDFC Bank, Maruti Suzuki, Pidilite Industries, etc. These companies are around us and are used regularly by people. There are no various need-to-know tools and strategies like moving averages, put-call ratio, candlestick pattern, etc. Just by looking around, you can find companies they believe in and can invest in them through the Indian stock market.
It’s important to invest in as many places as one can. Diversifying your investments is a common practice investors follow. In today’s day and age, investing has become very easy. All you need is a phone, and you can start your investing journey today.