For the middle class, it is a continuous process to earn just a little more and save a little more. Investing is a preference for them to ensure security and fulfill dreams. In such a scenario, they should know the importance of investing in stocks. Before, defining the reasons, let’s understand what is stock and how it works.
A stock is a form of investment that indicates the stockholder has partial ownership in the issuing company. Shares are the units of stock. For example, D has a stock of 100 shares of XYZ Company. When a stock value increases and worth more than the buyer paid to buy the stock, that’s a favorable situation for buyers. To trade in stock, investors require a Demat account and trading account.
Reasons why you should invest in Stocks
The Stock market is full of potential that can fulfil your goal of investing for wealth creation, and for managing our needs. For a middle-class family, an additional source of income is very supportive. You can earn profits in the long run by investing in stocks. As the company grows, your earnings will also increase surely and steadily year after year. Stocks are highly rewarding investments where risk is equal to reward.
Middle-class families like to invest in real estate, government securities, fixed deposits. In comparison to all these investments, stocks have silver lining features that possess better liquidity and movement. They can easily be bought and sold. As per your requirement, you can redeem a part of your investment. It’s better to sell bad ones. To invest in the stock market, you must have a Demat account and trading account. You may ask how to open a Demat account here. You need to find a trusted broker and check their broking services.
The Securities and Exchange Board of India (SEBI) constantly watches the stock markets to protect the interests of investors. You can assure that your stocks are in safe hands. Demat Account is one of the safety tools introduced by the SEBI where your stocks are stored and managed in the digital form.
Stockbrokers offer the facility of trading on margin. Even if you don’t have enough to buy a stock, you can buy the desired stock using the margin trading facility. You need to pay a proportion of the total cost of stocks at the time of purchasing stock and not the entire amount. Bajaj Financial Securities Limited Trading account offers a leveraged position in the market with one of the lowest interest rates in the market. This facility can help you enhance your investment potential.
Saviour in the Long Run
Stocks are known for long term profits with the concept of compounding. If you are looking for long term wealth accumulation, stocks are on the top rank. Appreciate it in the short period and returns will be significant in the long run. India’s share of world manufacturing output is expected to double in the next 3-4 years and 15% by 2030. Be ready to take advantage by putting your funds in an appropriate industrial framework.
Victory over inflation
You need to choose an avenue that can beat inflation. Stocks are one of them where returns will be higher than the inflation rate in the long run, hence beneficial.
The Bottom Line
Stocks are safe enough for the middle class and one of the best wealth creators but with regular caution. Liquidity, profits, additional income- all these features make stocks a dream fulfilling investment for the middle class.
Hold your stocks for long periods and reinvest the dividends to earn more. You need to find out the right investment type for wealth creation, and to manage needs. Sectors like FMCG, Retail Automobiles, Electronics, Jewellery, Apparel & Fashion, Travel & Leisure, etc. are the big beneficiaries in India.