In a share market, buyers and sellers trade publicly listed shares during specific hours. “Stock market” and “share market” are terms many people use interchangeably. But there’s a big difference between the two. While the former can only deal in shares, you can buy and sell all financial securities, like bonds, derivatives or foreign exchange. Learning how to invest in share market is quite exciting and beneficial. Read this article below to understand why you should invest in the stock market and its benefits.
Reason to Invest in the Stock Market
There are several reasons why stock market investments should be made.
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It is effortless
The advent of digital platforms has made the onboarding process extremely fast and painless if inconvenience and lack of knowledge deter you. You can complete the “Know Your Customer” process and identity verifications in a few minutes. It may come from your home rather than the old comfort method of standing in line with physical copies of share certificates.
You can use several resources to learn the nuances of investing, not only through convenience but also through new platforms. Thanks to convenience and knowledge at your fingertips, you can now access a variety of investment opportunities.
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Power of Compounding
Compounding has a significant role in investments and learning how wealth grows. One of the biggest benefits of investing in stocks is that it lets your assets grow over a period of time. This is one primary reason it’s worth considering investing right away if you have not done this already.
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Can give better returns than fixed deposits
If you’re wondering why you’re investing in the stock market, the answer is that fixed deposits can be boring because there are other places to get a better return. Traditional financial instruments such as fixed and recurring deposits offer high security and provide investors with predictable returns on the investment period.
While stocks align themselves to the markets and can deliver double-digit returns on their good days, standard products will give you a fixed number for each day. To help you achieve your objectives more rapidly with the same amount of investment you can divide a part of your assets in instruments such as stocks.
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Regular income in the form of dividends
Companies may distribute their earnings to shareholders by way of dividends. This provides a further source of income for investors, in particular when the value of their stocks has fallen. The dividends are more than enough to cover any profits from selling the shares. The amount may help increase liquidity in investors’ hands, or investors may use it to make additional investments to expand their investment portfolio.
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Higher liquidity
The stocks are considered liquid assets, and thus, the type of asset which can easily be converted to cash because it gets many buyers at a given time. However, this is not the case in all asset categories, and it may be difficult for an investor to attract a buyer of some assets, such as real estate. Selling a property may take several months or even years to generate cash from this investment. However, liquidating is much easier with stock investments. Learn what is derivative trading to get higher liquidity.
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The regulated and transparent framework
The Securities and Exchange Board of India regulates stock markets in India. In addition, SEBI is monitoring market developments and protecting investor rights. Therefore, investors can be assured of a legal framework that will reduce the overall risk associated with any possible fraud activities that companies may carry out when investing in stock markets.
Conclusion
The stock market can be a good way of ensuring your money grows over the long run, but many people remain reluctant to invest because of all the risks that come with it. However, the importance of public investment and investor sentiment in an emerging economy such as India has become a significant growth factor. Check out the online share trading app like Kotak Securities to invest in the stock market.