Despite its many ups and downs and constant fluctuations, share trading in the stock market can be one of the most potential places of investing your money.
Trading in shares is equivalent to walking a tight rope wire. It can be thrilling, and highly lucrative, but at the same time it has also reduced many an investor to dust. Share trading, if managed well and assuming all risks, can be advantageous in securing one’s financial position and earning profits.
Here are some of the many benefits of investing in one of the oldest and most popular investment avenues — the stock market.
Greater liquidity: There are two primary exchanges in the Indian stock market, namely the Bombay Stock Exchange (BSE) or Sensex and the National Stock Exchange (NSE) or the Nifty, that play crucial roles in stock trading. Every listed company trades their shares either on one or both the stock exchanges. As an investor, you stand to receive greater liquidity as the average daily volumes of stocks are high. Hence, if you are looking to purchase or sell shares on the stock exchange, the high liquidity option can make it effortless.
Versatility: There are numerous financial instruments on the stock market. These include shares, corporate and government bonds, mutual funds, commodities and derivatives. This wide range of selection offers investors an extensive array of assets to invest their capital. The versatility of the stock market and its offerings is advantageous in mitigating the many risks intrinsic to stock investment through the diversification of investment portfolios.
Better returns in shorter periods: Investing in stocks offer investors a high likelihood of garnering greater profits from their capital in relatively shorter periods, as compared to other investment assets such as fixed deposits or bonds. If an investor sticks to stock market basics and exercises a strategy, such as planning the trade, placing a stop loss, conducting due diligence and research etc. he can substantially lower the inherent risks and increase the returns on his investment.
Acquiring ownership and the right to vote: Owning even a single share in the company gives you an ownership right in the company. Owning a portion of the company provides you with the right to vote and offers you a say in the strategic movement of the company. Even though it may appear grandiose, there have been instances wherein shareholders have prevented the company from making wrong decisions detrimental to the company’s profitability.
Robust regulatory and framework: The Stock Exchange Board of India (SEBI) regulates the Indian stock market. Its responsibility includes monitoring the stock exchanges, its growth and protecting investors’ rights. Hence, when you invest in a financial product in the stock market, your interests are duly safeguarded by the SEBI. The regulatory environment and framework laid down by the SEI is a crucial step in cutting risks that could take place due to fraudulent activities from any company.
Ease of use: With the rise of technology and the Internet, investors have received greater convenience due to various technological advancements in the stock trading game. Today, trading takes place on an electronic platform to ensure a seamless transaction and the best investment opportunities in an open environment. Online share trading facilities provided by leading broking service providers such as Kotak Securities makes investing in the stock market a convenient and effortless method. You can place your orders through a computer from your home, and hold your products within your investment portfolio, electronically, in a single location on your Demat account. This smooth and uninterrupted process can make it easy to track and monitor the performance of your portfolio.
The stock market offers several benefits to investors. However, trading in shares must be done with a reasonable degree of caution, especially when making crucial decisions. Going through stock market basics and conducting due research is highly recommended to mitigate risks and enhance your returns.