Curious Case Of Stock Investment

It's a common knowledge that equity investment is one of the most dynamic forms of investment but surprisingly out of our huge population only 2% people invest in stock market. This glaring disparity, in terms of participation, is one of the reasons we call stock investment a curious case. Naturally, there are various other facets of stock investment which are equally baffling, some of which we will try to address in our exploration of this exciting world.

Over the years the stock market has grown by leaps and bounds and has been a tool of wealth creation for its investors. However, despite its glorious run there are some elements of stock market which are decidedly inexplicable. Let's skim through the surface and try to find out why stock market is such a fascinating form of investment.

Risky Proposition But Offers Uncapped Growth Potential

The primary reason which keeps ordinary people away from the stock investment is that it's extremely risky. Or at least that's the way it is perceived by the people at large. To be fair, the risk is always present in stock investment. Furthermore, it's not just risk of whether a company will perform or not but stock market is also susceptible to the exterior factors like the geopolitical situation, internal policy issues, demand-supply equations of the company, etc.

Undoubtedly investors have to bear a certain amount of risk but there are tools available which to a great extent help to nullify the risk factor. The stock advisory firm is one such solution. But those who are willing to take risk, and make right choices get amply rewarded.

Complex But Fascinating

Investing in stocks is very different than the other forms of investment. The retail investors who manage their own portfolio have to have good analytical skills and a sound understanding of the stock market. While cutting through the complex fabric of stock market you will encounter various jargon, patterns, indicators and whatnot. For rookie investors, this initial phase can be quite confusing and tiresome, but once you find your feet, this confusion quickly turns into sheer excitement.

The stock market is a platform for corporations to raise capital. As this money is later pumped into various businesses it becomes subject to a lot of scrutiny, speculation and analysis. Though it sounds little difficult to comprehend, it's utterly exciting to be in the midst it and experience it.

Fares Better Than Any Other Form Of Investment

The reason the stock market is called the most dynamic form of investment is that it fares better than any traditional or new forms of investment. Though the traditional investment mediums like real estate and gold are considered safer but they have their own set of challenges. If you are looking at real estate as an investment, then you have to raise some part of capital from banks, and the repayment in EMIs on high-interest rates has to match up to the appreciation of your property. Due to its high expenditure, its appeal is restricted to a privileged few. Similarly, investment in gold is extremely safe but the returns just doesn't match up to that of equity.

Mutual funds, PPF and fixed deposits are good options for those who wish to stay away from direct equity investment. A mutual fund, in particular, is looked at as an alternative to the stock market but in terms of returns, it falls way short to stocks. All in all investment in stocks is your best foot forward if your target is wealth creation.