So nice to being the part of such energetic group of traders. In view of awareness among the traders, today i will be discussing about the need of investing for a person.
As there has always been excitement in people regarding stock market due its fluctuations all over the time. Few people think , this is gambling, others say this is only a way for loosing money, and a very few say this is the only way to secure your money. What do you feel who is true.?
Infact all are true, every person has its own experience and perception. If some one started with a sum of money and he incurred loses in his first time (may be because he didn’t where and how to invest) he will always say its the worst thing to invest in stocks.
Further, if someone is new and he does some trades and got profit in first 3 trades and then suddenly gets lost all his money in 4th trade (as new traders generally incur in F&O segment), he starts saying this is total gambling.
And when surpassing the above two stages, if someone manages to sit in front of terminal for 15 months continuously (without loosing all his money, managing to come up with +ve return, howsoever small), then he come to know this is the best way to secure your money, obviously after getting lot of experience.
Now the question arises, why do i need to invest in stocks when i have banks, property , post offices and lot of other ways to invest?
The very first thing to say is to achieve your financial goals, which may be short-term or long-term goals. Also it is observed that, generally if you are putting your money in a Saving Bank a/c , you get a interest of about 4% p.a. Moreover if you go for a FIXED DEPOSIT scheme, you can get a return of 8-9% (on higher side).
One may also invest his money in property for better return but it is to be kept in mind that this money in non-liquified for you. You can’t take when you need it, similar is the case with Fixed deposit schemes.
Now the good thing about stocks as compared to property is that you have liquidity in stocks, further you need to put a lump sum of money to invest in property, where as you can even invest a small sum of Rs. 2000 in stocks and start investing.
And when we see the past data, equities have given at least 14-18% p.a for decades as compared to 4% of saving bank a/cs, 8% of Fixed deposits that too liquified one. Although if you have good knowledge of equities, they can even give you returns as high as 400% per year (only being stock specific).
Warren Buffett is a ultimate investor, but what makes him rich is
that he’s been a great investor for two thirds of a century. Of his
current $60 billion net worth, $59.7 billion was added after his 50th birthday,
and $57 billion came after his 60th. If Buffett started saving in his
30s and retired in his 60s, you would have never heard of him. His
secret is time. Most people don’t start saving in meaningful amounts until a decade
or two before retirement, which severely limits the power of
compounding. That’s unfortunate, and there’s no way to fix it
retroactively. It’s a good reminder of how important it is to teach
young people to start saving as soon as possible.
Note : Compound interest is what will make you rich. And it takes time.
Questions are welcome, comment and follow for upcoming posts.