Stock Market: It is the place where company shares are traded in electronic form, which are regulated by SEBI.
But the fact is the percentage of people who are participating in stocks are approx. 2% in India. This is because of a lack of awareness and general tendency of fear towards the stock market The percentage has to be increased for developing countries like India.
In current scenarios like Covid-19 the people have shown more interest in the stock market. The number of demat accounts opened during this period are more than 12 lakhs. In this the participation is mainly from youngsters. This is a good indication for Indian economy.
The benefits of investing in Stock Market: There are different ways to generate income from stock market, they are
Investing: The one who buys stock and hold for more than one day, or more, with a view of long term investment.
- Capital Appreciation: The raise in stock price with increase in demand of a company
- Dividends: A share in a profit issued by a company to their shareholders.
Trading: The trades which are executed within a day, without having any intention to carry forward. In this we have two types of trading.
- Scalp Trading: It is a trading strategy to book profits with minor changes in stock prices.
- Swing Trading: It is a trading strategy which is based mainly on technical analysis. The entry and exits are done with support and resistance level.
Wealth Creation: Investing in the stock market over a long period gives you an opportunity to create wealth. Compounding plays a vital role in wealth creation, such as adding returns to already earned returns.
Beat Inflation: The one who invests in stock market has higher opportunities to generate more returns which helps in beating the inflation.
Rights Issues: The Company issues the rights to their existing shareholders to buy additional shares with a discount price.
Bonus shares: It is paid to the existing shareholders in the form of bonus shares to capitalize company own revenue reserves.
Stock Split: In order to increase the shares, the company will split the face value of stock. The main purpose of stock splits is to increase the liquidity in the stock.
Accessibility: The better advantage of investing in stocks is that we have ‘N’ number companies listed in exchanges and based on research we can invest in fundamentally strong companies.
Ease of diversification: Stock market provides better diversification if one of your companies falls down, other companies may raise and give good returns in future.
Tax Benefits: If you hold stocks for more than 12 months, the profits you earn after selling the shares are tax free.
- Note: as per latest amendment in tax law, if the profit is more than one lakh there is a tax slab of 10% applicable
Reaching your goals: The stock market helps you in reaching your short term goals like buying a car, dream vacation and long term goals like retirement, children’s education or marriage , buying a house etc.,
Availability of information: Due to the increase in technology, there are more ways to get information from the Internet, TV’s, magazine, websites and apps.
Stock market as a career: Nowadays most of the people are choosing the stock market as a better career option because it is one of the best ways to earn money individually without working under any other company.
Very Important Benefit of Stock Market: By having a demat account , one can invest in stock market in demat (electronic form) . So, the entry and exit can be done immediately online through mobile applications.