At the moment, because of the pandemic, the stock markets have been volatile. Thus it is very much expected for people to have question like Is It Safe to Invest in Stocks !
Do not get panic by short term fall of the market. Look at the bigger picture. From future prospective, all economists suggest an economic rebound. That is the nature of market. One day you may see a free fall, the next day it rises again.
When a pandemic like COVID hits or 2008 finance crash, market always recovers in a W Shape.
Many new investors are still confused whether to go for Stocks or Mutual Funds, which is better !
Be it Stocks or MF, remain invested for longer period, is the greatest strategies to protect your financial future. It may be easier to pursue short-term profits in 2021 because of the increased highs and lows that occurred in 2020.
However, the economy is still in recovery, and sticking to your investment strategy is more essential than ever. Investors are rightly frightened as a result of the volatility in the stock market as well as global economic uncertainties. But it does not imply refusing to participate in the market.
During the COVID-19 epidemic, several strong businesses suffered significant reductions in stock prices. So, the question comes to mind that, is it safe to invest in stocks?
Table of Contents
Is It Safe to Invest in Stocks Right Now?
Investing in the stock market in 2021 is very likely to be profitable.
When interest rates are low, individuals will be encouraged to spend or invest.
Investing in the stock market when you have a long-term view is nearly always a smart idea. This is because the market tends to move up over time, and timing the market is not as essential as being in the market for longer periods.
Over the long run, the market has grown approximately 10% per year. As you spend more time and money, you will get a larger return.
You shouldn’t simply put all your money into the market at this point. There is a very high chance that the price will fluctuate significantly shortly. Instead, it is wiser to invest on a weekly or monthly basis and increase the investment over time.
A favorable moment to invest for the long term may be particularly beneficial during recessions. When stock prices drop, however, many investors feel is it safe to invest in stocks?
7 Fun Facts About the Stock Market
The rule of 72 – first thing you are likely to ask when you begin investing is how long it will take to double your money. This rule is a very handy and popular technique to find out how much years will it take to double your invested money. This may not give you the exact result, but can get an approximate idea.
To estimate the return on investment, divide the rate of return by 72. To illustrate, let’s use an example in which you invest Rs 500,000 at an interest rate of 8%.
So, 72 divided by 8 is equal to 9. That means your money will double in the following 9 years.
- Only non-financial companies listed in NASDAQ 100
Many people are not aware of NASDAQ 100 index list of companies. Since finance stocks are risky and unpredictable, so NASDAQ 100 only contains sectors like software, telecommunications, retail/wholesale trade, biotechnology, media, transportation, and health care.
Although they have created a separate index named as Nasdaq Financial-100.
- How many number of stocks in Nasdaq 100
As the name suggests, everyone thinks, when they buy Nasdaq 100, they must be investing in a bunch 100 stocks. But no, that is true. The fact is index includes 109 components. Because many of the listed companies has multiple classes of shares.
Example of multiple component – Alphabet Goog and Alphabet Googl .
- The largest stock exchange-BSE
BSE is often referred to be the world’s largest stock market. There are about 5,500 BSE-listed businesses, making this the world’s largest number of listed companies.
Also, the oldest stock exchange in Asia, the Bombay Stock Exchange, was founded in 1875 by Premchand Roychand.
As well as the Bullion King, he was also nicknamed Cotton King, the Stockbroker King, and the Big Bull due to his success in the stock brokerage industry. India has 23 additional stock exchanges, along with the BSE.
- A small percentage of the population invests
Only 2.5% of the general people invest in the stock market. This amount is not sufficient and the significance of financial independence should be understood by more individuals. Out of the 132 crore population, only 8 crore investors buy mutual funds. In India, around 12% of GDP is invested in mutual fund assets.
- MRF is the most expensive share
Investing is the most expensive share in the stock market, which is the case with the MRF shares. Buying one share of the MRF costs Rs 69,290.
Since its debut, Nifty has given returns of over 11.32.
In 1995, 1,000 was the basic value of nifty, which currently sits at 10,360 points.
- Most Demat accounts are in Mumbai
The total number of Demat accounts in India has been estimated to reach 3.38 lakh as of September 2018. Based on SEBI’s statistics from November 2018, there are 177,00,000 NSDL and 161,00,000 CSDL accounts. Mumbai is at the top for the largest number of Demat accounts, with Gujarat coming in second.
- Stock markets are often referred to as the “Bull Market” and the “Bear Market.
If the stock market can be separated into two ways, a Bull market and a Bear market, then this situation may be said to be a Bull market.
A rising stock market during a bull market is termed a rising market. This metaphor is of special importance since the horns of the bull rise into the air, symbolizing increasing stock values. When the market is in a downtrend and stock prices are dropping, the market is described as a bear market.
With lower prices than in the past, it may be said that the bears are on the ground and the bulls are in the air.
Also Read: Importance of Finance Planning
Reasons to Invest In Stock Market
A lot of people nowadays are interested in investing in the stock market because of the inspirational success stories of Indian investors. Even while investors’ understanding of the Indian stock markets has increased, there are still some investors who don’t understand the nature of this financial instrument’s volatility.
- Small amount
The entrepreneur will have to make a large investment and take on a lot of risks to establish a tiny company. Buying shares in a publicly-traded company has a much lower risk than buying a stake in a privately held business.
- Liquidity
When you place an order to purchase a stock, the amount of money you are required to deposit is deducted from your account as soon as the stock reaches the target price, and the money goes into your account at the same time. You’ll be rewarded when the stock reaches the selling price and deducted when it falls below that price. To this end, having stocks as a particularly liquid investment vehicle is very beneficial.
- Getting a piece of a lucrative enterprise
Stocks represent ownership in a firm, which provides a host of benefits. One of the primary benefits is that, since these companies are already operating and fully set up, one may profit from the future success of these companies without having to become involved in their day-to-day operations.
Dividends are also advantageous. Each year, listed businesses reward investors with dividends as a sign of appreciation for their hard work. In the form of new shares or a set amount per share, dividends may be sent to you.
- Investing in one’s options
An investor has the flexibility and capacity to invest in stocks that have the highest expected return. In other words, investors would want to discover the company with the highest profit margin that’s being offered at the lowest price. Investing in the stock market allows investors to make such decisions.
- Simpler negotiating discussions and cheaper fees
Stock prices move up and down, but there’s no bargaining with the other side since you’re already finished. Even if you choose a brokerage firm that has lower brokerage fees, you may also work with one that has cheaper fees. To minimize investment loss due to costs, a cheaper brokerage is ideal.
- Increasing rates of return
For a better return on investments, investors choose equities rather than fixed deposits. A rule of thumb is that businesses normally return considerably more than simple investments. As a result, it is sound business practice for investors to do comprehensive research and purchase a company that offers better value, which is steady and undervalued.
Before investors make any decisions, they need to know as much about the stock as possible, including how it has performed in the past and the associated dangers. Before investors can expect to earn money in the stock markets, they must first believe in their ability to do so.
Final Words !
A second point is that stocks included in this article and any others that appear safe may not be safe for brief periods. Any company, even the best-run ones, experiences short-term pricing fluctuations, and the outbreak of the COVID-19 pandemic is an example of this.
Focus on whether businesses are likely to succeed in the long term, rather than the short-term stock price fluctuations.
I hope, through this article, “Is it safe to invest in stocks? 7 fun facts about the stock market”, you might have gained some wisdom and added some vocabulary to your knowledge.
