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Why Should We Consider Investing In Stock Market?

Most individuals want to include stock investments in their portfolios, benefitting investors in various ways. Anybody with little knowledge can find investment opportunities in the market. If individuals do not have the time and expertise to invest in shares directly, they can take the mutual fund route. Like this, there are many benefits of stock market investing. Stock markets are open for experts as well as beginners in the financial domain. 

Why Consider Investing in the Stock Market 

The following are the factors making most individuals consider stock market investments:

  1. Investment amount

One need not employ a large amount of money to start investing in the stock market. One can start with as low as one share in the online trading system. Demat accounts have eliminated the issue of odd lots to make stock investments in the offline trading system. 

  1. Convenience of investing

Stock markets have evolved dynamically with technological advancements, making the trading system more secure, transparent, fast, and efficient. Now the stock trading is entirely a digital process using demat and trading accounts, eliminating the entry barriers for retail traders. Once individuals open demat account online, they can invest in their choice of financial securities, like shares, mutual funds, bonds, government securities, etc. Also, individuals can invest in the US market directly through equity investments or indirectly through mutual funds or exchange traded funds (ETFs). They can even invest in fractional shares of tech giants, like Netflix and Google.

  1. Flexibility to meet long-term and short-term financial goals: 

One can approach the stock market with long-term or short-term investing approaches. Depending on the investor’s financial goals, they can choose equities, bonds, etc., for short or long time frames. However, they must gauge the risk associated with the asset they choose to invest in. There are no lock-in periods for stock market investments. Whenever they want to liquidate their demat investments, they can sell them on the stock exchange quickly using a trading account. Demat meaning is the electronic form of securities to trade on stock exchanges online.

  1. Attractive Returns

Prudent stock investing allows individuals to earn attractive returns and the capability to beat inflation levels. Long-term investors can gain from the appreciation of stock values over long periods and gradually create wealth. Long-term investors can get earnings in the form of dividends, and other corporate actions.

  • Dividends: Many companies provide regular dividend payouts to their shareholders. It is a part of companies’ profits one has invested in. Investors keep earning with the growth of the company.  
  • Merger Benefits: When two companies merge, their stock prices get impacted. Generally, it leads to a rise in the stock price of the acquiring corporation.
  • Bonus Shares: It is a common strategy that whenever companies want funds for business expansion, they often provide bonus shares to their existing shareholders. Investors can get these shares at comparatively lower prices than their market value.
  1. Safety and Transparency

One of the regulating bodies in stock markets is the SEBI (Securities Exchange Board of India). Each trading transaction in a demat account is completed under the surveillance of the SEBI. Every stockbroker has to follow the rules set by the SEBI to ensure transparency in online stock trading. The regulatory body keeps framing new trading rules or amending existing rules to safeguard the investors’ interests. To encourage more retail participation, it introduced a basic service demat account (BSDA) where small investors can hold securities worth up to Rs.2 lakhs without incurring account opening or annual maintenance charges (AMC).

Thus, it is obvious that such benefits can allure more retail participation in the market. They need to know the market outlook, build investing strategies, develop skills to identify the profit potential of security, and make prudent investment decisions. Data-driven and research-based decisions can be handy to venture into the stock market. 

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