To meet your retirement needs, investing in the stock market is a rewarding proposition. Over a considerable period, your returns will increase, provided you take out time to study the concept of stock trading. Use this tool to your advantage by understanding the intricacies and examining the common myths that deter you from taking the plunge.
There is an air of mystery that surrounds the stock market, especially for novice investors. Though there are calculated risks involved, you have to make smart choices that prove financially viable over the long-term. To help you avoid wasting your hard-earned money, time, and energy, rely on valuable inputs from the best stock tips provider in India. Here we provide further clarity by busting six common stock market myths that are far from true:
Equating Investing in Stocks to Gambling
When you buy a stock, you are purchasing ownership in a company. It entitles you to a share of the profits earned by the said company. In the process, you create wealth and boost the economy. Gambling, on the other hand, does not result in any net gain. The same money shifts from losers to winners without generating further capital.
A significant indicator of the value of a company in the competitive open market is the price of its stock. When the stock price drops considerably, you cannot expect a significant return on your investment. Similarly, a sudden spurt in prices does not necessarily indicate long-term profits. Only if the jump in prices is owing to a justifiable healthy reason can you can expect to benefit from it.
Believing the Stock Market is Exclusive Territory for the Rich
You do not need to invest heavily to earn from the stock market. Everyone is welcome to trade in the stock market, including those who can afford only to make a minimal investment. Thanks to real-time technology, even the general public today can gain easy access to the inside market scoop.
The stock market is certainly not an exclusive club for the wealthy, seasoned investors, and brokers. It is all-inclusive and lives up to the premise that a little goes a long way. Invest wisely in reliable shares with smaller amounts and see your initial investment multiply. You will most definitely end richer than how you began.
Stock Markets Function Akin to the Law of Averages
Even though stocks rise and fall, they do not conform to your knowledge of physics, wherein what plummets eventually rises and vice-versa. A company’s share continues to increase as long as it is appropriately managed and exceeds customer expectations.
When a company delivers the best quality services and products on time at every given opportunity, their stock prices shoot up. Underperformance, poor management, and not adhering to best practices negatively impact a company’s share prices.
High Risks Lead to Higher Returns
The functioning of the stock markets has repeatedly proved that high-risk stocks yield lower returns when compared to their low-risk counterparts. Just notice the practice adopted by profitable investors world over. They have gained immensely by investing in shares that were undervalued in the stock market. Also, shares that assure higher returns are not always able to sustain that upward swing for good.
Ignorance is Bliss
In matters involving your money, it pays to extensively research and stay an informed individual investor as knowledge is power. With little knowledge, you are ill-equipped to make sound decisions, and that is a dangerous practice that results in grave consequences. When you do your initial homework by studying the trends of the company or industry that shows promise, you are bound to be monetarily rewarded.
If you lack the time or initiative to delve into such finer details, employ the services of a professional advisor. It is worth paying someone who understands the share market rather than proceeding blindly in the absence of basic facts. The latter approach makes you invest in a whole lot of cheap shares, hoping that at least a few reap rich rewards. However, it may be far wiser to place your trust in just one company whose shares though expensive, yield higher dividends.
Drop in the Market Results in Money Loss
A sudden dramatic crash in the stock market does not infer that you, as an investor, will lose money. The shares that you have may be worth much less after such a drop. Hence, it makes sense to hold on to them in the hope of a recovery. In a scenario where there is a massive drop in stock prices, the minute you sell your shares, you are likely to incur losses. Avoid making rash decisions at such times under the influence of all that you read and hear.
Eliminate the above myths to make smart financial decisions that pave the way for higher profitable returns.