Why Invest In Equities? Although there are plenty of investment avenues available to investors, investing in shares (equities) is one of the most common investments made by investors, as it can offer high returns when invested for a longer period of time.
What are Equity Investments?
When you invest in equities the possibility to increase the value of the amount which you have invested.
Why Invest In Equities?
Research and studies have proved that equities have outperformed as compared to most other forms of investments in the long term. Shares have the potential to appreciate their value over a period of time.
It also provides a portfolio with the growth necessary to reach long-term investment goals. However, it is not necessary that all equity investments would guarantee higher returns.
Equities are high-risk investments. An investor needs proper study and knowledge about the stock market before investing. There have been several examples of common people who have created fortunes by investing in shares of Reliance Industries, ITC, Infosys, TCS, HDFC Bank, etc to name a few, and holding them for a period of 10 to 15 years.
Even if we go by statistics, then in the last 40 years, Sensex itself has given a CAGR return of around 16%. (The base year of the Sensex was 1978-79 and its base value was 100 points which has now increased to 41,253.74 points as of 31st December 2019).
Apart from this, investors also received dividend income on their shares.
This shows that it is rewarding to stay invested in equities for the longer term. But before investing, investors need to understand that the stock market simply reflects the long-term growth of Indian and international businesses and that when as an investor you buy into it, you are purchasing a piece of that future growth.
Many people consider investing in shares as rocket science but it is not so. Many even consider it gambling, risky, etc but remember what some legendary investors
have to say about it –
“Everyone has the brainpower to follow the stock market.
~ Peter Lynch
If you made it through fifth-grade math, you could do it.”
Warren Buffets
“You don’t need to be a rocket scientist. Investing is
not a game where the guy with 160 IQ beats the guy
with 130 IQ.”
“If you are shopping for common stocks, choose them
Benjamin Graham
the way you would buy groceries, not the way you would buy perfume.”
I am sure the quotes mentioned above would have shattered your myths about stock market investing like –
- You need to be from a finance background to be successful in stocks.
- Investing in the stock market is similar to gambling.
- Analysis of stocks is difficult to learn and seeking professional help is a must.
For why invest in equities, After gaining some experience, you would definitely be able to invest money in stocks wisely and would surely build good fortune for yourself and your family in long run.
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