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Welcome, all of you to our wonderful website… Today we are going to know in this article, Top 5 Tips When investing in Stocks…
Often we come across the list of billionaires. He is called a billionaire because his stock holdings are worth billions. Billionaires from Jeff Bezos to Bill Gates and Elon Musk, most of their wealth is in the form of their own companies or their stake in other listed companies.
5 Tips When investing in Stocks:
Call it stocks or call it equity, it is a part of the company that issued it. If You bought it, that means you got a special stake in the assets of that company. And when the business of the companies increases, their profits increase, then it is obvious that the value of their shares increases, and along with this, the investors become rich.
Why invest in shares?
The best answer to this question can be given by statistics. You can get a glimpse of this by estimating how much wealth has been created by the Indian stock market in the last 40 years. Compare this with assets like gold, bank FDs and PPF accounts, the picture becomes more clear.
If someone had invested one rupee in gold in 1982, its value would have been 30 rupees 14 paise today. The value of FD would have been 43 rupees 64 paise. Had the same money been in the PPF account, it would have increased to Rs 48.67. But compared to 1982, the Sensex is at about 566 times today.
Stock Market is the king of returns:
If someone had invested five thousand rupees in Sensex in 1982, then in the year 2022 its value became Rs 28 lakh 25 thousand. Compared to this, the value of the same investment in gold would be Rs 1.5 lakh today.
The same five thousand rupees in bank FD would have increased to Rs 2 lakh 15 thousand today and Rs 2 lakh 45 thousand in PPF. This is the wealth-creation capability of the stock market. 10, 20, 30-or 40 years, whatever period you look at, the stock market has outperformed every asset class.
Tax Aspect:
Apart from this strong potential for long-term growth, there is another major advantage of investing in stocks. Stocks and Mutual Funds are not only the best way to make money in the long term, but they also bear the least tax burden.
If you are in the highest tax bracket i.e. 30 percent, then the returns from bank FDs will be taxed according to this slab. On the other hand, if you hold the investment in shares for one year or more, it is taxed at only 10 percent.
Growth Potential:
India’s economy is growing the fastest even in these difficult times. India’s GDP is estimated to be $5 trillion by 2026. By the year 2031, GDP can be 10 trillion dollars. The biggest contributor to this growth will be the corporate world of India and it will also be the biggest beneficiary. Therefore, if you invest in the shares of these companies, you will also be able to become a part of this growth story of India and rich too.
Investment opportunities in the stock market can be found not only in India but also in foreign companies. If you want to invest in companies like Apple, Microsoft, Netflix, Nike, or Amazon, there are many international platforms and mutual funds for this. There is no harm in diversifying your portfolio outside India. Many global companies have excellent track records and good growth potential.
The only caution is that you have to pay attention to the difference between good and bad companies, only then you will be able to make money from the stock market. Shares of good companies will grow your money fast, while shares of bad companies can cost you a lot.
Homework Required:
Nowadays, a lot of information is available on the internet about investing money in the stock market. You can do the research yourself. Before investing in shares, one should understand the financial statements of the companies by visiting their website.
Why did sales increase? Or why did the profit decrease? Is the company losing market share in its segment? What is the reason? Share it at a fair price or not? You should find answers to such questions.
If you cannot do this yourself, then take the service of a broker. He can help in picking good stocks. Investing in mutual funds is also a good way as they are managed by professional fund managers and regulated by the market regulator SEBI.
Remember one thing you want to create wealth from the share market then invest money for the long term. One should invest for roughly five to seven years. If there is a period of decline in the market during this period, then you should not panic and sell your investment at a loss.
