India’s vibrant economy provides ample opportunities for everyone to earn a decent living and earn extra income through various investment options. The topmost and fastest way to earn this extra income is by investing at an early age in the share market or the stock market.
Why Invest in Share Market?
Understandably, stock markets in India- Bombay Stock Exchange and National Stock Exchange witness frequent bullish and bearish trends. Meaning, stock prices can rise or fall without any prior warning. And these bullish and bearish trends make investments in the share market more exciting while providing opportunities to make some really huge amount of money.
Superb Stock Exchanges of India
The share market in India offers multiple choices for investors. For example, stocks of over 5,000 companies are listed on the BSE- which is the highest number for any share market in the world. The NSE, which is relatively new, lists more than 2,000 stocks. These shares are in the large cap, middle cap and various segments of the small cap companies. Hence, the sheer choice that an investor has can we well imagined.
And finally, the BSE and NSE operate under strict rules and regulations of the Securities & Exchange Board of India or SEBI. Before any stock gets listed on the share bazaar, the company has to comply with complex and stringent requirements of SEBI and various other departments of the Indian government. Hence, chances of stock market scams such as the ones that occurred in 1992-1993 are now almost negligible.
These conditions are favorable for anyone to invest in the share market. Moreover, any adult can invest in the share market and earn a lot of money.
Why Invest at Early Age in Share Market
As I mention earlier, people of any age can invest in the share market. However, there’re several benefits when you start investing at an early age in the share market. Sounds interesting? Continue reading.
Starting with Low Investments
There’re no specific lower limits for investing in the share market. This makes it ideal for investing at an early age. You can start by buying just a few stocks every month and build a portfolio over a number of years, when you begin investing at an early age.
This means, by the time you reach retirement age, you would have enough stocks that would be giving you excellent dividends to cover your golden years when you don’t have active income. Putting aside even Rs.1, 000 per month and buying stocks would be enough for a beginner at early age. You can step up investments as you go along.
Excellent ETFs in Share Market
Maybe you’re unaware of this option. The Indian share markets also lists Exchange Traded Funds or ETFs. Basically, an ETF is a type of Mutual Fund. However, it is different from a Mutual Fund because you can buy and sell ETFs on the stock market whenever you want. ETFs allow you to diversify your investment portfolio.
Usually, large Asset Management Companies or AMCs launch New Fund Offers for ETFs. This means, an ETF has a face value of Rs.10 only. And the AMC adds a premium to the ETF. Therefore, buying an ETF during the New Fund Offer works out much cheaper than buying in the secondary market or from the stock market. The price of ETFs rises exponentially over the years. Hence, whatever you invest on an ETF NFO will give you extremely high returns in future.
Stocks Are Highly Liquid
When you start investing with small amounts at early age in the share market, you’re also building a sort of corpus fund or saving for emergencies. You can sell the shares you’re holding while stock markets are working- from Monday to Friday except national holidays and festivals. And the money goes into your bank account or trading account within a few hours. This eliminates the need to take loans or borrow money from relatives and friends.
Furthermore, some stocks whose prices are high will fetch you much more money than any savings account or Mutual Funds when the share market is on the upswing. Therefore, you can cover costs such as buying a home or marriage, medical treatment for some family member or any other unexpected expense. Selling the stock you own is better than taking loans. Because a loan can lower your credit ratings. Selling stocks doesn’t hurt your credit score.
Buying Stocks during IPOs
Another benefit of investing at an early age in share market are the Initial Public Offerings or IPOs. You can buy stocks during IPOs and maintain them in your portfolio till they start paying rich dividends. All dividends can be utilized for more investments. Therefore, it is genuinely advisable to start investing at an early age in the share market.
Stocks during an IPO also come with a premium. However, prices of a right stock you invest upon will soar when it starts trading on the share market. The dividends and price rise gives you an additional benefit. Often companies also announce bonus shares for shareholders. Hence your portfolio of holdings grows bigger without investing more.
These four benefits of investing at an early age might prompt you to consider share market now. And it would be an excellent decision too. Buying shares for the long term is an excellent idea to build wealth. The sooner you start- the better.