Time and time again we have to face this positive issue of what to do with our surplus funds. While some of us look to fill our desires and spend the money on the various luxuries of life some of us let our money earn low interest by keeping them in fixed deposits or saving bank accounts. There is a very low number of individuals who consider to invest or save their money through the stock market by using instruments like SIP’s (Systematic Investment Plans), Mutual Funds, IPO’s (Initial Public Offering) and many more. When you invest into the capital market you allow your money to make money for you at a higher capacity as compared to the other investments like fixed deposits.
If you take a look at the historical returns of more than past 50 years around the world, the stock market has outperformed almost all of the other investment or saving instruments like gold, real estate, fixed deposits etc. Higher returns are only one of the benefits that stock market provides, another important one is liquidity. The stock market can be one of the most liquid investment options. You can sell your shares, mutual fund units and have cash back in your account in less than two days whereas you probably will have to face issues like lock in periods or lack of buyers in other instruments like fixed deposits and/or real estate.
Investing in stock market also gives your funds a sense of diversity that limits your down side. For example if you have lots of funds invested in real estate and then you invest some funds in the equity market, even if the real estate market falls down your equity investments might not have been affected and that part of your investment would be protected through diversification. Most of the Indian families have savings in forms of gold and real estate so investing or saving through the equity market might be a good option to lower your risks.
The capital market has become so efficient and effective that it is extremely easy for you to keep track of all your funds and investments on a second to second basis in an extremely transparent manner. SEBI, the governing authority of the stock market in India is very stringent and severe in making sure that the investor’s money is safe and is not being mistreated in any manner.
Overall the stock market instruments these days are so flexible and efficient that they can be customised to cater your exact requirements of risk and return which is very difficult while investing in older instruments like fixed deposits that do not offer much room for customization. For any individual looking to save or invest there cannot be a better way to do us other than stock market.
To know more about how to start investing in the stock market please visit Begininvest.com