In recent times, I have been talking with so many peoples and found one common thing about the India stock market. Everybody feels insecure about the stock market whenever I talk with them. Some say it is very risky and some other says investment in the India Stock market is very difficult. But these peoples don’t know that not investing in the stock market is riskier.
If you do not invest your money in the stock market then you may invest your money in any other security tool. Either you may keep your money in a savings account, FD, or real-estate, Gold. Keeping your money in the bank account or fixed deposits, the risk is more than the stock market. But due to lack of knowledge peoples seems it risky.
Some people have little knowledge but they still feel it risky. They feel risky due to the volatility nature of the Indian stock market. Sometimes it is low and sometimes it is at high levels.
Anybody of them has not noticed that the BSE Sensex Index in Dec. 2005 just crossed 9000 mark. Now, today India Sensex crossed 41000 mark.
Now, look very closely, the return they have given is 78% in just 14 years.
Yes, there is some volatility in the market. That volatility gives you a buying opportunity or allows you to start your investments. In my opinion, the stock market is risky for those who invest in blindly. If you do good research and do proper due diligence than the India Stock market is very easy and not risky.
KEEPING MONEY IN SAVINGS ACCOUNT AND FD
If you are keeping money in a savings account that most people do, you may get max. to max. return of around 4%. Now if you are looking at the inflation rate it is almost 6% (b/w 2012 to 2019) in India. Due to the inflation rate, the purchasing power is reduced by 6%. That means the things which you were purchasing at ₹100/- in 2012 the same thing is available at ₹106/- in 2019.
The bank saving account’s interest rate not able to beat the inflation rate, you are not able to earn anything. Eventually, the motto to create wealth through saving account is vanished even you don’t know about this.
Now apply the same concept on fixed deposits. It gives returns between 6-7% maximum. The inflation rate is 6% and your earnings 0-1% return only. The fixed deposits only give us the actual present value of the money.
INVEST IN REAL ESTATE TRUST
Real Estate is tangible. That means you can see, feel, or experience the property. Even you may live in or rent it out. In both, the way real estate has its value.
Investment in real estate is not so easy. The big challenge is the proper paperwork and linked documents. Real estate investments are also costly in terms of maintenance, municipal charges, and taxes.
If you purchase a property with thinking to sell in a very quick time to get more income, please understand it is not easy. Selling a property with this thinking is challenging. It is a time-consuming task. It may not fetch you money when you need it.
Real estate can give very good returns but the returns depend upon GDP growth. If country GDP growth is around 7.5-8% then the real estate can give return around 10-12%. But currently, India’s GDP growth is around 4.5% so the return on real estate also very less. It makes no sense to risk your money for only 6-7% return.
The government gives the tax rebate over the property, which allows salaried people to buy a property and go into debt. In that case, your investment in the property goes into the vein.
INVESTMENT IN GOLD
In India, we all love Gold with anything else. By purchasing gold we feel secure. But the problem with gold is –
- If you purchase gold in the form of jewelry, it will take making charges. Even if you purchase in the form of coin or bar, there also making charges occur. This making charge takes away your return on your Gold.
- If you buy Gold and put at home or in bank lockers, it gives you some kind of theft insecurity all the time.
- If your gold jewelry is out of fashion, it also takes you to maintain charges as well.
The Gold gives you a return in every 10years of around 8-10%. The prices of gold are increasing day by day, recently it touches 40K prices. Now from a few years, if its trend like this it will also touch to the maximum price range. Due to an increase in its prices, it is very difficult to purchase for middle-class peoples. So it is better to invest money where returns are good and investments are easy.
Also read How to Invest In Gold?
FINAL WORDS ON INDIA STOCK MARKET
I am never been agreed not to invest money in Real Estate or Gold. One must invest in these tools although; they are your income-generating assets. But try to maximize your investment in the India stock market so you can earn more and more return. I am totally against to keep your money in the bank account or FD. The money in your bank account should be your emergency fund or liquid fund.
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