Many people have turned to investing in the stock markets today by hearing the stories of ace Indian investors. People are now more aware about the Indian stock markets. However, they lack the knowledge to brace the volatility associated with this financial instrument. Generally, Investors perceive stock market as a ‘get-rich-quick’ scheme. And for others, it’s a place where profits can be made when stocks go up, i.e. perform well.
Lack of awareness, anxiety about risk, high returns, and a need for risk-free investments that give stable returns are some of the factors which deter people from Investing in the stock market. This affects investors’ earning capabilities and the benefits that they can reap in the long run.
Therefore, Only 2% of the Indian investors invest in the stock markets. People generally have more trust on Fixed Deposits than the stock markets.Investors prefer traditional methods of investment that give sure shot returns.
Stock market is risky because people do not understand the day to day fluctuations in the market. They cannot relate the upward or downward movements of the share price with the company’s performance. Therefore, they consider it as another form of gambling. They think that no one can surely predict future outcomes, but just speculate the market.
The majority of people who lose money in the stock market are not financially educated. They take a lot of unnecessary risks. Investors need to adopt a balanced approach to minimize risk and maximize the reward by following a reliable investing strategy for getting returns from the stock market.
Investment in the Stock Market is considered as one of the best ways to generate wealth. Any investor can achieve their long-term financial goals by investing in the stock market with a strategic investment plan and data-driven decisions.
Equity investments are the only asset class that can beat inflation in a growing country like India.You will struggle to grow your money if you are young and do not have 70% of your savings in equity. The power of compounding will not work in favor of the investors.
Investors should increase your wealth by investing rather than to degrade its face value by inflation.Hence,to make money in the next two years, they should invest in something less volatile. However, invest in the stock market if they want to make a fortune in 20 years.
Risk Involved in Stock Market
These are the real risks that every investor should be aware of before investing in the stock market.
1. Trading with emotions:
Investors should never trade in the Stock Market emotionally. Investors should trade with discipline, patience and persistence.
2. Non-diversified portfolio:
A Non-diversified portfolio is risky in the stock market. There is a big risk involved in your investment if you have invested all your wealth in a single stock.The best company shares can also be affected by new government norms.
3. No Financial Research
Investors have to decide whether the company is doing good or bad. They have to take the decision to hold or sell the stock. So, if Investors don’t know how to research a company, it will lead their investments to a big danger.
4. Speculating the market:
People buy stocks because they believe that the price of that stock is going to rise. Investing only on the basis of speculation is risky.
5. Futures and Options:
People should not invest in Futures & Options without proper knowledge as the number of people losing money in F&O is relatively high.
6. Word Of Advice
Elders like to guide and motivate their young ones about investing money. However, they are also unable to understand the stock markets. Hence,they are cautious about investing in shares. According to them, it is not a safe place to invest one’s hard-earned money. This keeps most young investors away from the stock markets.
7. Lack Of Courage
Investors do not show courage while making investments in stocks as they fear losing their money. If an investor has suffered losses in the stock markets because of wrong investments in the past, they would generally tend to keep away from it.
Till now, you would have got the answer to this question “ Is Stock Market Risky”.
Stock market is one of the best places to make money from your investments.Every investment has some risk involved in it. Depending on the type of risk taken by the investor, the reward is achieved.