India’s equity culture boasts a rich history, with the Bombay Stock Exchange (BSE) in Mumbai, the oldest stock exchange in Asia, leading the way since 1875. When you factor in the National Stock Exchange of India (NSE) and other regional exchanges, the Indian equities market’s total market capitalization exceeds 4.3 trillion USD (as of December 31, 2023), making it the second largest among emerging markets and the fifth largest globally (after China). This historical success is a compelling reason for many to consider share market investments, all with the same ultimate objective in mind: ‘To make money.’
5 Reasons You Should Start Investing in Share Market Today
To invest in the stock market, you will have to set aside money for investments. It’s not necessary to open an account with all of your excess cash on hand, even though the returns increase with the amount of money you have in the market. Here are five reasons you should consider before making share market investments:
- Boost your income: Research indicates that the average historical rate of return for stock market investments is roughly 10%. This potential for income growth, coupled with the ability to reduce costs and make additional space in your budget, can undoubtedly assist you in reaching your financial objectives. On the other hand, stock market investing expedites the accomplishment of long-term objectives. In essence, your portfolio’s capital gains and dividends represent an additional, ever-growing source of income.
- Outpacing inflation: Making wise financial decisions about high-yield investments is the only way to outpace inflation. For astute investors, the share market is the ideal venue. Investing in stocks of reputable companies can yield a respectable, steady return of 12–18% annually, contingent on the quality of the stock and the time you take to select it. Thus, if you want to stay up with rising inflation, investing in the stock market is an excellent choice.
- Liquidity of Indian Stock Market: The Indian equities markets are enormous and highly liquid. The market capitalization of more than 170 equities listed on Indian markets is more than $5 billion USD, which is the fourth-highest amount globally. Their daily turnover is quite high. Only the US, Chinese, and Japanese equities markets have a higher daily turnover rate than those with more than 250 stocks.
- Reduce Taxable Income: Investing in the stock market has several tax advantages. The tax on long-term capital gains is 10% on gains that surpass one lakh rupees. Even so, this is preferable to the 6.5% return from FDs, which is once more subject to taxes ranging from 10% to 30%, depending on your tax bracket. Because of this, the adage “The Rich Pay Less Tax” is well-known.
- Compound Interest: By investing in stocks, you can benefit from compound interest, which increases your wealth tremendously. The majority of bank savings accounts offer basic interest. Nonetheless, you can receive compound returns by making stock investments. One of the main arguments in favour of stock market investing is the compounding effect.
Conclusion
Investing in the share market today can boost your financial future by allowing you to take advantage of growth opportunities, diversify your portfolio, and leverage the power of compounding. Start now to secure financial independence and stay ahead of inflation. There’s no better time to invest than today.