A stock market is a place where investors can buy and sell stocks or shares. It is a platform where companies issue their shares and other securities. It also includes the OTC (Over the counter) market where investors trade directly with each other without the involvement of the stock market. It also includes an index which basically shows the top performance of the top Nifty 50 (Which includes 50 companies) and Sensex (Which includes 30 companies) companies. It is really hard to track every single company on its own, so that’s why Index covers all over the market at once and shows the entire market performance. Either a person can invest in the stock market with their own experience or with the help of a SEBI registered investment advisor.
The benefit of investing in the stock market varies from person to person according to their risk appetite and it’s beneficial for long-term profit goals. Which is beyond FD (Fixed Deposit), Gold and Mutual fund.
The benefits of investing in stock markets are as follows: –
1) Better long-term return –
One of the best reasons for investment in stocks is a higher return on investment which can fetch you the benefit of compounding. The equity market is the investment vehicle which demands long-term investments in order to fetch better returns. While past returns do not justify future returns for any stock, it can give returns if you give enough time to your investments.
2) Diversification benefits –
The stock market offers so many investment instruments like stocks, mutual funds, and bonds, derivatives. Investors can invest in the investment instruments according to their risk appetite and financial goals.
Investment in various stocks helps an investor to diversify its portfolio and give more exposure to ward safety. The role of SEBI registered stock advisory Company comes in when investors go for diversification. They can give the best advice for your investment.
3) Dividend Income –
Stock markets also help investors to generate regular income in the form of dividends. The dividend is distributed by the company as a part of their profit to the investors as a source of income for many shareholders. Mainly many companies pay dividends as a source of regular income but many companies reinvest to earn profit. Dividends are the way that a company pays to shareholders even if the company is at loss.
Dividend also helps to increase the return on investment of stock. Dividend also helps investors to survive volatility in the market. A consistent dividend payout shows the company’s performance and its stability in the market.
4) Hedge against inflation –
If your money isn’t moving forward then it means it’s moving backwards and that’s what we call inflation. Investing in the right stock or mutual fund can help to fight against inflation. Basically, inflation means decreasing the purchasing power of money.
It has been seen many times that the value of stock beats inflation rates. It increases the value of the stock price which benefits the company’s profit level. It has been seen that Brighter Mind Equity Advisory helps to outperform the market and make an investment portfolio best with less risk-taking.
5) Transparency –
SEBI helps investors with transparency before investing in the stock market and prevents them from fraud. The protection of the investor interest is the priority of SEBI. It reduces the risk of graduation activities for companies.
6) Ownership –
Purchasing stock of a company gives you ownership of that company. A shareholder has a voting right in the company’s decision. That ownership of a company gives you the right to participate in the decision-making process of a company. Shareholders also get preferences in any profit distribution before any other investors.
These are the benefits that investors can get at the time of investment. For that Brighter Mind, Equity Advisor helps to create a portfolio and guide to investing in the right stock which outperforms the market with lower risk at the time of diversification.