It is no wonder that properly planned and executed investments pay handsomely. It is true that the stock market is a risky place but only as risky as it is rewarding. India is a country where the majority of the people want to play safe with their hard-earned money. That is the reason that Fixed Deposits and Recurring Deposits are still preferred over stocks and mutual funds, even though the return in these FDs and RDs are next to nothing in comparison to the return in stocks and mutual funds. But one thing that these FDs and RDs can guarantee is the security of the deposited money which is not an option in the stock market. To estimate the difference in return in both places consider the following examples:
- Rohan is a businessman. He knows the ways and means of the stock market and is willing to take the risk. So he deposited ₹20000/month in a mutual fund for 30years. After thirty years his total money bearing after all ups and downs would be ₹22 crores.
- Mahi is a government employee. He is conservative on the topic of the stock market so decides he does not want to put any money there. So he too puts ₹20000/month in an FD for30yrs and his investment grew to a total of ₹1.2 crores.
So in both the situations above we witnessed the return position in both schemes. One had security the other didn’t. That’s a perfect example of the power of compounding.
You need to know all the details about opening a Demat account. Only when you have a Demat account, can you trade in the market.
Some stereotypes associated with the stock market
1. Stock Market resembles gambling
This myth has spread faster than wildfire due to some tremendous losses of some people. Most people have created an image of gambling in their minds for the stock market. This is entirely false. People with good knowledge and estimation win their bread and butter from the stock market. There even are millionaires and billionaires who got to that position solely by investing properly.
2. Expert specific
Another myth doing the rounds recently is that the stock market is not the cup of tea of everyone. It is true that to make a fortune as exorbitant as people like Warren Buffet you need superb skills. Knowing just ins and outs or ways and means of the market will make do and can generate just the right amount of return on the invested amount.
3. High risk assures high return
There is no certainty that high-risk investment will result in high returns. Things can go extremely south in the intraday as well as the long term. There is no certainty on how a stock will play in the future. Only estimates and predictions can be made. The price of a stock depends on umpteen number of factors. So there is no guarantee that a high-risk investment will surely fetch a significant amount of returns.
The stock market has gained a notorious reputation for being risky. There is no denying this fact, but if managed efficiently with the skill set then it can fetch a copious amount of returns. You can open your first Demat account with 5paisa. They are the best broker in the market.