In that case, if you delay the start, you’ll only reduce the size of your probable benefits. So, be earlier for the better. After all, investment in the market is indispensable for financial security and long-term growth. Of course, there are reasons to support this view.
Overwhelming Compound Interest
First
and foremost, the lucrative calculation of Compound Interest is simply
unavoidable. Now for one newbie to the arithmetic of loss-profit, compound
interest is the interest you collect on the money you put in and the interest
you received over the previous period. It simply keeps increasing in multiples
in time.
For instance, if you invest ₹.10000 at a 10% simple interest rate for 10 years, you’ll get ₹.10000 in interest. On the other hand, if you put the same amount of money for the same period at the same compound interest rate, you will earn an interest of about ₹.17179. The real attraction is the more you invest, the bigger the return you earn. But there are still some people who dare not defy the conventional call.
Overcoming the Fear of Investing
Fear
and misconceptions are the two major hurdles that prevent people, especially
the market-averse, from being familiar with stock market norms. Lack of
knowledge of the market's functioning gives rise to most of the unfounded fear.
A little bit of study or searching on the internet will drive away all
anxiety. A few more things can come to your help:
· Starting with a small or
negligible amount
·
Setting small goals at
first, then going for a bit bigger ones
·
Being attentive, but not
obsessed with market movements
·
Understanding that market
volatility is usual, and it leads to stability
·
Letting the money stay in
one place irrespective of any fluctuation
One can start in any way: Investing for a day (Intraday Trading), for some months (Swing Trading), or for some years (Long-term Investment). But a beginner like you should go with Long-term Investment. The reason is that human instincts push us to keep money safe for a long time. Also, long-term investment yields bigger returns. But even for that, you must know about fund diversification and its benefits.
Fund Diversification and Its Importance
Fund
Diversification means spreading your investments across different assets (like
stocks, bonds, real estate, mutual funds, commodities, cryptocurrencies, etc.)
to mobilise your money at different rates. It reduces the risk of loss when one
investment loses value; others might go up to balance things for you.
Though you can go for any of the above ways of investment, for now, you should know about the three common types:
1. Stock:
A stock is a small piece of ownership of a
company. A company’s stock has a definite number of smaller divisions. These divisions
are called shares. You can invest to buy shares.
2. Bond:
A bond is a kind of loan that you can give
to a company or even the government. The borrowers promise to repay you with
interest after a certain period.
3. Mutual
Fund: A mutual fund is a collection of money
from different people. That huge amount of money is used to buy a mix of
investments, like stocks or bonds. However, it is managed by a mediator who
looks to grow the money for everyone in the fund.
Seeking Professional Advice
By
now, you must have some thoughts going within. Maybe you have decided to test
your luck. But I will say you should get ready to try your patience. Even a
financial consultant would suggest that. True, a market professional drives
away many such fallacies. You will learn about how you are lagging in terms of
earning more. Not only that, he will also help you create a suitable investment
plan.
Conclusion
You
must remember that the market is increasing in volume with every passing day.
And with it, are opening up many new opportunities for earning; investment is
one of them. The world of investment is still in its infancy, especially in
India. If you plunge into it now, you will end up on the winning shores. True,
like every game, this one also bears the chances of defeat. But it is you who
will plan and prepare to avert the losses and embrace the winning moments. Warren
Buffett has rightly summed it up: “The Stock Market is a device to transfer
money from the impatient to the patient.”
Additional Tips: Investment in the stock market has become much easier than it used to be ten years back. Now you have so many Android or iOS apps around that you may not even need a guide. Do download one and sign up. You will learn the rest yourself.
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