5 reasons to invest in the stock market in 2020
Every financially independent individual knows that money cannot grow itself into wealth in a day. Keeping money in the savings account only helps in accumulating a fixed amount of interest rate. The only way to make money out of money and grow wealth is to do investments.
A lot of people do not even consider this option because of the risks associated with almost all types of investment options. However, if one strictly follows the rules of the money market and invests wisely, the risks are worth taking. When talking about investments, the first thing that pops-up in our minds is the stock market.
Trading in the stock market is one of the oldest and smartest investment options that one can find. There was a time when this process was a bit cumbersome. Investors had to buy physical share certificates and store them safely. The advancement of technology turned the tables around and a solution was introduced in the form of “Demat Accounts”. If you heard the term for the first time, you must know what is Demat Account in detail. Demat is the short form of “Dematerialisation” which means converting physical shares and securities into electronic forms. Let us now understand the reasons to invest in the stock market in 2020.
Major Reasons To Invest in Stock Market
“Should I invest in the stock market?” - a question that frequently crosses the minds of thousands of people who are looking for investment options. People keep making assumptions rather than believing and analysing facts. If one considers the facts, there are plenty of reasons to invest in the stock market and then find out what is Demat Account as well.
Easy Investment Option - Gone are the days when buying and selling shares or securities was a time-taking task. The new-age platforms have laid out the easiest tools for the investors to utilise for their benefit. Learn what is Demat Account and what is the role of the Depository Participants in the stock market investment. Today, with the e-KYC option one can easily open trading and Demat Accounts which help in transactions of buying and selling shares. This saves a lot of time and makes it easy for investors to increase their productivity.
Utilisation Of Power Of Compounding - Stock market investments can help an investor in growing wealth if the power of compounding is used accurately. Compounding is the process of reinvesting the invested amount and the annual interest incurred on it for consecutive years. This helps in increasing the value of the capital amount in a short period. Also, keeping a track of one’s portfolio becomes easier with Demat Accounts as the statements of shareholdings reflect everything.
Good And High Returns - Stocks are useful wealth-creating instruments that can help one increase the numbers in the bank account very effectively. Some people believe in fixed deposits or recurring deposits as a viable investment option.
However, they only offer a fixed amount of returns which is reasonable. For good and high returns, one should invest in the stock market. One can buy shares, bonds or securities, etc. as per his choice and then sell them when the prices go up. This trading process offers a huge amount of returns and helps in growing wealth easily.
Powerful In Long Term Investments - The stock market is the best place for investors who wish to make long term investments. This requires one to keep faith in his choices and patience. Buying shares and holding it for a considerable amount of time until there are right opportunities to sell it can turn out to be a profitable deal in most of the cases. All one needs to do is read the market conditions carefully.
Plenty Of Options - For making investments in the stock market, one can buy shares, bonds, government securities, ETFs (Exchange Traded Funds), etc. There are plenty of options to choose from. Consequently, the chances of high returns also increase as the market condition for all the commodities are not the same all time.
What Is The Use Of Demat Account In The Stock Market?
Now that you know what is Demat Account, let’s check some of its uses in the stock market. Demat Accounts are used for making trading in stock markets easier and simpler. Traditionally, share and security certificates were acquired physically. This used to take a lot of time and effort as the investor had to visit the offices to complete the transaction process. Also, the physical certificates were prone to damage as it could be forged, lost or stolen.
Demat Accounts were introduced by the NSDL (National Securities Depository Limited) in 1996. It helps in dematerialising physical certificates into electronic form for a better trade experience. As per the regulations of SEBI (Securities and Exchange Board of India), the traders are inclined to have a Demat Account for trading in the BSE (Bombay Stock Exchange) and the NSE (National Stock Exchange).
How Does It Help?
A Demat Account helps an investor in buying and selling shares and securities electronically. It can also be used for holding mutual funds investments. The Depository Participants provide the services of Demat Accounts and act as intermediaries between the two major depositories of India and the investors. The NSDL and CDSL (Central Depository Services Limited) are the two major depositories that centrally monitor all the Demat Accounts in India. An investor needs to link three accounts for a smooth trading industry, they are:
● The first is a Demat Account which holds electronic shares and security certificates.
● Second is a personal bank account for the monetary transactions involved in the buying and selling of shares.
● The third is a trading account which is necessary for trading in Exchanges.
● Depository Participants provide services of trading and Demat Accounts for a better investment experience.
The stock market is a host of investment opportunities with lots of benefits and returns. In fact, many investors enjoy participating in the stock market and exchanges. The important things are doing enough research, assessing the risk-appetite, and choosing the right kind of stocks that suits one’s interest. Find the right investment opportunity and step into the stock market in 2020 to earn rewards.