Why you should invest in share market [Reasons to invest in share market]

Why you should invest in share market [ Reasons to invest in share market]
Why you should invest in share market [Reasons to invest in share market]

The main reason to invest in share market is the returns you get from share market or stock market. The returns may be 15%, 20%, 25%, 30% in short terms say in a month, two months, three months and so on. If you invest your money for long term, then it can give you returns as much high as 50-100% and even more. Sometimes it also gives 200-1000% return in long term. It definitely gives more return than a bank FD. 

Why you should invest in share market is because the ease of doing investment. You just need to open a Demat and Trading account. You can open a Demat account and trading account with broking company like Zeodha, 5paisa.com, Kotak Securities, Angelbroking etc. You can place a buy order and a sell order very easily with your trading account. Investing is a serious business and it is a art of patience.

The reasons to invest in share market is very simple, it will not only make you earn more money than anywhere else but also it can make you rich. I know it sounds stupid but I can prove it. There are many persons who got rich by investing in stock market. You might have also heard about them. From Warren Buffet to Rakesh Jhunjhunwala, there are many people who have become billionaire. Rakesh Jhunjhunwala, Radhakishan Damani, Rakesh Damani, Raamdeo Agrawal, Vijay Kedia, Nemish Shah, Porinju Veliyath, Dolly Khanna, Ashish Kochalia are the top investors in India.

Why you should invest in share market is the number of times, you get to compound your money. If you invest your money in a bank FD then you will get 6-9% interest in a year. But with share market you might double your money in a month or so on. The formula of getting rich lies on number of times you compound your money and more the returns you compound with.

When a person invest his funds for a short term, he is called as a trader. A trader always books his profit in short terms. But the real benefit lies in investing for long term. So when a person invest his funds for long term, he is termed as an investor.

You must become an investor

You should ask yourself why you should invest in share market. You will come up with several reasons. But there are probably 10 best reasons to invest in share market or Benefits of investing in stocks.

The following are the 10 reasons to invest in share market.

1. Invest in share market to grow your money

What are the options to grow your money, a common man will only find it by doing a bank FD or by doing FDs in other financial institutions. There, your money will grow slowly and yearly. But not with stock market, here you can grow your funds much faster than anywhere else.

Suppose you invest Rs.10,000 in a bank FD.
Investing it for 30 years at the rate of 7% per annum it will grow to Rs.76122 with compounding

But in stock market suppose you invest Rs.10,000 and you get a return of 20%, it will grow to Rs.23,73,763 in 30 years with compounding.

When the returns are as much high as 30%, then it will grow to Rs.2,61,99,956 in 30 years with compounding.

2. Invest in stock market because historically they have done well and gone up

Everyone looks the history of anything so that they can come on a decision to step forward with it or not. The history of anything tells about it previous activities and performance. You can compare between history of any matter and current situation of that matter and expect its future perspectives.

Looking at the 100 years of history of stock market. They have done extremely well and gone up. The stock market has created great wealth for those who invested in share market.

The benchmark Nifty50 have done extremely well since its inception. It was established in the year 1996. Now it is trading at 10800 and it has once crossed 12000 mark. The benchmark itself has gone 10 times from 1000. The stock like Eicher Motors Ltd has gone upto Rs.32600 and above from Rs.12 of its inception at 1999.

Like this many of the stock have performed extremely well.

3. Invest in share market because you will make more money than anywhere else.

You have the options to invest your money in different methods. You can invest your money in a bank FD (Fixed Deposit), RD (Recurring Deposit), in a government bond, treasury bills, lands and many other options. There you will make limited amount of growth. But in stock market, you can make more money than any other investments.

Historically, it is seen that stocks have performed way far better than any other investments. Considering you have invested 120 rupees in Eicher Motors Ltd. then, it have been grown upto Rs.3,26,000. So you can imagine the potential of stock market.

Stock market has always done well than a bank FD, a government bond, a treasury bill and also from a land. Expert says only in real estate your money can grow like stock market.

4. Invest in stock market because here it has the magic of 'Power of Compounding'

The power of compounding is the key to the ultimate growth of your money in stock market.

In stock market your money can grow upto 20%, 30%, 40%, 50% returns and above every year.

If you invest money for 30 years, 40 years or 50 years or so, your money will compound every year making you rich one day.

Investing only Rs.1000 for once and compounding it for 50 years at a return of 20% can make Rs.91,00,438 for you. Suppose if you are able to compound it at a return 30% then, it will make you Rs.49.79 crores. 

That's called power of compounding

5. Invest in dividend paying stocks to get steady income

Investing in a dividend paying stock is the best methods to get a steady income. You will earn money from dividend and also from the stock. 

Suppose you invested in 30 dividend stocks, you will earn hard cash from there and you will also earn from the stocks. Besides that some companies  is pay dividend quarterly.

The dividend payout ranges from 1% to 10% of your total investments. Suppose you have bought 30 dividend stocks with a total investments of Rs.10,00,000. Considering the overall stock (as a group) pays a dividend of 5% to your total investments.

Then you will get Rs.50,000 in cash to your bank account every year as dividend.

Most of the dividend are paid quarterly so you will get Rs.50,000 quarterly in a year.

Suppose you have retired with Rs.50,00,000 and you invested those money in 30 dividend stocks. Suppose the whole the stock (as a group) pays a dividend of 5% then you will get Rs.2,50,000 in cash to your bank account as a dividend.

Retirees like the dividend paying stock because whether the market goes up or down, they do get a steady income in cash as dividend.

Dividend stocks are better to be bought

6. Invest in stock market because money in cash will loose its value

Money sitting in cash looses its value, what does this mean ?

This means your money will loose its value because of inflation. If you have heard about what is inflation, then probably saying it the slow and steady process of making things cost more over the time.

You might have heard your grandparents saying, at our time, we can buy a bicycle with only Rs.500. Now the same costs today Rs.5000. That happens because of the inflation, it makes the product and services cost more and more over the time.

Inflation increases with a rate of 1 to 4% every year. You can only beat this inflation by investing in stock market. Because in stock market money grows beating the inflation.

7. Invest in stock market to make your investment more diversified.

Investing in stock market makes your money diversify to earn you more. The more methods you choose to invest your money makes your investment more diversified.

Suppose, you have a full time job and you have done some bank FDs and also you have rented out your home to a college student. This makes your income more diversified.

To make it more diversified why don't you invest your money in share market, where money can grow more and more over a long term of period.

You must invest in stock market

8. Invest in stock market to save for your retirement.

Everyone invest their money in different options to get a handsome return for their retirement. But those who do not invest their money in share market, it's a big loss for them, I think. Because in share market you get to compound your money which can ultimately create good wealth for you, thus making your retirement planning successful.

More options available for you to get your retirement goals are going for a bank FD, CD, bonds, treasury bills, land, pension scheme etc. But stock market can fulfill with ease.

Invest in stock and for your retirement goals

9. Invest because it is easy to invest in stock market

Investing in stock market is easy. You need to open a trading account with a broking company like Zerodha, 5paisa, Angelbroking etc. and place your orders. Your money will be converted into equity which will be held in your Demat account electronically. You can convert it into cash whenever you sell your equities. Withing two working days you will be able to withdraw your money to your bank account.

Stock market is said to be a liquid asset which can be turned into cash relatively very quickly than any other investments.

Suppose you have Rs.10,00,000 in the form of equity in your Demat account. Within few clicks you can convert it into cash. You can withdraw it after two working days.

10. Invest in stock market to own a part of the company you like.

Even if you buy a single share of any company you like you are actually the part owner of that company.

If you buy shares of Apple Inc., you actually are part owner of the company and the CEO Tim Cook works for you.
You will be getting rights to vote for any decisions the company takes like merger, demerger, hiring director to the board of directors and even executive compensation packages etc.

Share market is very risky but yet it is a powerful method to earn money. You can make money while sleeping.

Study, understand, research all the things about stock market then enter in this world.