Don’t Miss! Top-Notch Advantage of Investing In Stock, Share & Equity Market
A stock market or a Share market is a platform where buyers and sellers of stocks or(shares) which represents the small chunk of ownership of A business that is listed on a stock exchange.
Anyone can buy a stock of a company that is listed on the stock exchange through his Demat account and claims a small part of the ownership of the business of that company.
The list is Top-Notch Three Advantage of Investing In Stock Market is below
- Higher Liquidity
- Higher returns in shorter periods of time
Full Explanation Of Stock Market In This Video
There is the various advantage of Share Market but this majorly plays an important role in the Equity Market!
There are two stock exchanges in the Indian stock market, BSE(Bombay Stock Exchange) and NSE(National Stock Exchange) which play a significant role. The majority of companies trade their shares on either or both of these exchanges.
Because of this, the average volume of the market is high which is a good signal for investors. Volume in the stock market simply means how many transactions have been done at a time.
Therefore, Due to high liquidity investors can easily buy or sell any product on the stock exchanges. A person can do Short term trade or long term investment depending upon his strategy and analysis.
Liquidity in the stock market plays a vital role for investors and traders to test if the stock is aggressive or a flat-pattern stock. Volume is directly proportional to the liquidity.
The majority of traders prefer higher volume stocks to trade as it gives their desire results in less time than lower volume stocks.
Liquidity in the stock market makes it easier for investors and traders to easily make transactions within an instant rather than waiting for a certain period of time on other types of assets like real estate property. Liquidity gives freedom to a trader to trade stocks anytime and from anywhere.
The stock market provides various financial tools such as stocks, bonds, mutual funds, and derivates. This provides investors a wide option of products in which to invest their money.
In addition to that, the flexibility is beneficial in lowering the risks inherent to stock investing by allowing diversification of investment portfolios. An investor has many options to invest his money.
He can invest it in various types of companies like a pharmaceutical company, an IT company, even in a financial organization like a Bank, a Petroleum company, In airways companies, even in real-estate companies like L&T.
The stock market gives you the freedom to diversify your portfolio thereby reducing your risk and increasing your risk to reward ratio. This method clearly eliminates the bankruptcy outcome as you have your capital diversified in all the types of companies.
The only time there will be a possibility to lose all your capital when the market is going through a recession or a depression. So, the Stock market gives you various options and you just have to do your own analysis and invest your money. Without any analysis, there is a high probability that you will suffer a loss.
Therefore, an individual who does a Long-term investing stock market is the best platform for him in order to multiply his money through compounding. In a long-term race, your money makes money.
Higher returns in shorter periods of time
If we compare other investment products like bonds and fixed deposits, stock investing offers investors the best probability of making higher returns in comparatively fewer periods of time.
You know that banks give you a maximum interest rate of 8% per annum at its best but if we take inflation into consideration i.e. 4%+ -2 then in the worst-case scenario you would be getting only 2% per annum from the bank.
But if we analyze the stock market you can clearly see that it gives at least a 15% interest rate per annum which is far greater than any Banks. If an individual do a proper research and analysis of its investment then he can easily gain even more than that 15% interest rate.
An investor uses the stock market to invest in blue-chip stocks which give consistent high dividends and its market value has given a significant growth rate in past years. Now the blue-chip stocks are the stocks of that top 50 companies which are listed on the Stock – Exchange.
These companies have dominance in their respective categories which reduces the risk of any big losses. So one can invest in blue-chip stocks and can earn consistent gains over its investment.
Youtube Video For Stock Market: By Sunil Minglani