Introduction
You may have heard some of the world’s best investors praise investing in the stock market. Making wise bets on stocks of valuable companies can help you grow your wealth in the long to pull something with a lot of effort or difficulty. The same level of wealth generation is unlikely with investments in fixed-income instruments.
What does stock market investing mean?
The stock market is a marketplace where a company’s shares are traded in the public domain. Shares represent ownership in a company. When you invest in shares of a company, you become a partial owner to the extent of investment. You get voting rights, and dividends if the company declares them and also profit from the increase in share prices.
You can buy and sell shares listed on any stock exchange. When the company grows, its share price increases, increasing your returns. When you invest in the right company, you stand a chance to make a handsome profit in the long run.
Why invest in stocks?
- The most prominent reason to invest in stocks is to benefit from the high return potential in the long run. Unlike fixed-income instruments that provide low returns and may not even beat the rate of inflation, stock investing allows you to make considerable profit in the long run.
- You can invest in companies that you believe in. By doing so, you get a chance to be a part of a journey that you truly appreciate and understand.
- Difference between short-term and long-term investment – How should beginners choose?
- One of the most confusing aspects of stock trading for beginners is understanding the investment horizon, which is the period they are willing to hold their investments. Typically, there are two investment horizons: Short-term and Long-Term. Here is the difference between the two:
- ● Benefits of short-term investment: A short-term investment is when an investor buys securities to sell them within 3-4 months. They allow you to make quick profits in a bull market and enjoy the profits for personal benefit. Here, investors don’t have to hold their money for a long time in the stock market and yet make profits if the prices of the securities increase.
- ● Benefits of long-term investment: Long-term investment, also called value investing, is when you buy securities to hold them for multiple years. Long-term investments ensure that you mitigate stock market risks as they multiply over time. Such investments provide the best value of securities to the investors as the extended period increases the potential for better profits.
So, when should I start investing? - The sooner you start the better it is.
- Going back to what we started with, there is no right time to start drinking water, eating food or exercising. You just do it whenever you feel thirsty, hungry or lazy. Similarly, there is no right time to start investing. Anyone can start investing at any age they want. The only thing that will differ will be the type of investment and its allocation, based on your income, savings and spending and of course, your financial goals. A 12-year-old will have different financial goals and risk-taking capacity as compared to a 42-year-old. So, your age will impact your investing style and not the when of when you should start investing.
- The first thing to consider is how to start investing in stocks. Some investors choose to buy individual stocks, while others take a less active approach.
- Try this. Which of the following statements best describes you?
- I’m an analytical person and enjoy crunching numbers and doing research.
- I hate math and don’t want to do a ton of “homework.”
- I have several hours each week to dedicate to stock market investing.
- I like to read about the different companies I can invest in, but don’t have any desire to dive into anything math-related.
- I’m a busy professional and don’t have the time to learn how to analyze stocks.
- The good news is that regardless of which of these statements you agree with, you’re still a great candidate to become a stock market investor. The only thing that will change is the “how.”
- Where to start in the Stock Market as a beginner?
- After getting your monthly salary, do you just randomly give all your money to anyone?
- No! You’ve worked hard for that money and it’s yours!
Then why invest your money in the market based on someone else’s advice or tip? It’s like you’re giving your hard-earned money to a stranger to use it for something you don’t even understand! So, the first and foremost step to start investing is to learn its basic concepts so that you can understand how the market works and make well-informed decisions. But, the lengthy & boring financial courses that are available in the market make this process dull. Here’s where Quest by Finology comes to your rescue! Learn investing & finance on the go with Quest’s action-packed, practical courses which are adjustable to your attention span.