Module 1: Chapter 8
Investing is a way to keep the money you've saved aside while you're busy in your life and have those savings work for you so that you can enjoy benefits in the future. According to the legendary investor Warren Buffet, investing is the process of laying out money today with an expectation to gain more money in the future". This is the reason why investing in the stock market is considered as the most profitable way of growing your money. In this chapter, we will discuss all the do's and don'ts of investing to help you become a mindful investor.
Why Equity Is The Best Way to Beat Inflation
An equity investment refers to the money that is invested in a company by buying its shares in the stock market. These shares are traded on the stock exchanges. Equity investment is the best way to beat inflation because of benefits like higher capital gains, limited liability, exercise control, liquidity, and so in. Usually, equity investors buy shares of a company with an expectation that they will increase in the form of capital gains or generate attractive dividends. Note that equities can strengthen your portfolio by diversifying it.
The main advantage of investing in equities is the higher possibility of increasing the value you have invested as capital. Equity provides you with a wide range of investment options with a minimum initial investment. And this is the reason anyone can invest in equities regardless of their income. You can start investing with as little as Rs 500 per month.
Should You Become An Investor or A Trader
Trading Vs Investing has always been the hottest topic of debate in the stock market. Both are lucrative investment options provided the right knowledge and circumstances. While investing is an art, trading is a skill that you need to acquire. Both of these profit-generating methods are meant for different people.
Trading is an approach where you need to make quick buying and selling decisions while keeping an eye on the fluctuating prices of the stocks and shares. This period generally lasts for a day, and hence it is known as day trading. Sure, it can help you grow your money exponentially, but a single mistake of yours can result in unrecoverable losses.
On the other hand, investing is a long-term strategy that works on buy and hold methodology. Here, you buy the shares of a company when the price is low and hold them for years and decades to enjoy a steady flow of returns. It is a low-risk approach that offers moderate returns. Although trading can offer you high returns, investing can save you from humongous losses.Become a trader, if:
Whether you choose to become a trader or an investor, be very mindful about it. Make your decision on the basis of your financial goals, personal preferences, and your current situation. Moreover, do in-depth research and analysis before entering the stock market.
Do's and Don'ts of Investing in Stock MarketsTo help you become a better investor, we have listed some do's and don'ts that you need to keep in mind.