The stock market is the place where you can easily find lots of people minting money while others lose their hard-earned money in no time. The stock market is just like the other markets where goods are exchanged like commodities, currency etc. and here goods are replaced with the shares of the company. And it is perceived in Indian society; that the stock market is gambling and should be avoided. But is it really so? We will discuss this in very basic form so that everybody can understand the stock market irrespective of their education and career he is in.
Before diving into the topic we must correlate it with one very simple example of property. If we have to build a residential building, then the very first step is to select the ideal location and purchase the property. This process is followed by land clearance from unwanted things like stones and trees. After this, comes the basics of any building and that is the laying up of the foundation. Through this simple exercise, we can foresee the requirements of related knowledge and process before starting any investment. And that is what we need to understand before going into the basics of the stock market.
Myths associated with the stock market:
In our society where maximum people belong to a class that is highly ambitious but fearful at the same time about losing their money, look at the stock market as gambling. And there are reasons for society to believe this, like past experiences, scams and myths that are spread among the public and by the public. So before discussing whether the stock market is a gamble or not, first we need to break the ice about the myths associated with the stock market. Here we will try to discuss and clarify the facts about those myths because if you have those myths in your mind, it is not possible for you to invest in the stock market.
The stock market is Risky
You must have come across somebody saying “the stock market is very Risky” to you or somebody else while you were in the middle of talks about money. It is the first and biggest myth that is present in our society and it needs to be addressed properly. If you fear losing money then the answer is yes, the stock market is risky. But, without knowing the rules of the game, every game seems risky for us, is it not true? The same concept applies here in the stock market as well, if you are entering the market without knowledge, you are exposed to a risky environment.
The stock market can behave with small variations in its path but that is for the short run. In the long run, the stock market is comparatively very less risky and always gives a good return to its investors. These small ditches are called corrections in the market and as an investor and you should be ready for these variations with leverage of 10% ups and down every time. Hence you must plan and manage your personal finances and investments taking this 10% ratio in mind.
If you feel that the stock market is unsafe and it is the only reason for your money to be parked in fixed return instruments, then you must relook at the business mechanism of those instruments. They are investing your money in the same stock market which is risky for you and generating a lot of returns while paying you a penny out of it.
You must know everything before investing
The second myth or can say the excuse generally people give to avoid the stock market talks is that it needs proper education to earn from the market. Prima facie my answer to this unawareness is yes, you must have some knowledge about the market behaviour before entering into it. But you must have a thorough understanding and expertise in it, the answer is a big No.
A basic understanding of the market will surely save you from losing your money but having good knowledge will generate a good return for you as well. But that does mean that you cannot go with the market if you don’t have proper education. There are a lot of examples that are defying this myth and literally uneducated people have made money out of it because they understood how to read market behaviour.
Don’t have enough money to invest in the market
It is a general belief that those people who are minting money in the stock market are millionaires, and yes they are. But that does not mean that the common person cannot invest in the market. The one who is now a millionaire was also a common person like us years ago. He challenged this myth and dared to enter the market against all myths and is a millionaire now. You can invest in the market with small money and not require a hefty amount for it. Nowadays, after the process of account opening and trading becomes online, you can even start investing with the minimum amount of 500 Rs through Systematic Investment Plans (SIP).
Don’t have enough time to watch the stock market
You must have listened to these words from many people after you convinced them to invest in the stock market. They are right because they don’t have sufficient knowledge about How to invest money in stocks. If you are an investor and not a trader and looking for long-term investment then regular watch on the market is not at all necessary. Monitoring of stocks timely is very much required for a trader who goes for daily income from the stock market. For a long-term investor, you should only choose the best stocks to invest in and that’s all. Now how to choose best stocks for investment is another question which is discussed in another article.
So, you must have a fair idea about the stock market before entering into it and I tried to clear some myths about it so as to make your investment easy. You don’t require a deep understanding of concepts and a lot of money to invest in the market. All you need is some patience and time which you will devote to understanding the market behaviour for your wellbeing only. Yes, the market is volatile but not risky and you must absorb the corrections and the time will come for your smooth sailing across the ocean of investment.