How and Why to start investing in stock Market

One of the many compelling reasons to invest in stock market and perhaps the most important thing is that we need more money to fund our retirement as we live longer.

Peoples earn money from different sources out of which partly spent and rest are saved for their future. Futures are affected by many factors and one of that is inflation.

Money that is saved today will not have the same value in future that it carries today as value of every dollar or rupee you saved decreases every year due to inflation.

Now the basics question is, what should I do then? To take care of inflation, you need to put your money in a place which will give you good return by which these factors can be taken care.  There are plenty of opportunities available for investing your money.

You can put your money in bank deposit, real estate, life insurance, shares (popularly known as stocks), bonds, gold etc. Poor investments can lead to negative returns and reduce future purchasing power. Today, in this article we will show your how to start investing in stock market with confidence.

Why should you invest - How to get invested in stock MarketNow the question is where should I invest. Out of the available option of insurance, bank deposit, shares, gold and bonds you have to chose as per your requirement. To select any of these, we have to know the risk that is associated to each of these investments.

As per the rule, the riskier the investment, the higher will be the return. If you see the past record of stock market, investment in stocks will give you higher return compare to others. The benefits in Stock market is its easy liquidity and a good return compare to other investments.

By investing in the stock market, you’ll have lot more wealth for things like your retirement, children’s education and your recreation or you could pass on your wealth to the next generation. Investing in stock market or in other areas will make you to prepare for the future.

There are two ways you can invest in stock market;

Investing in Stock

Value of the stock market fluctuates daily on the basis of companies earning potential, inflation, economics and other factors. If you can understand this fluctuation then you can invest directly in stock market through a broker by opening up an account with them. By this you manage your own fund and responsible for your portfolio.

Investing in a Mutual Fund

Mutual funds are managed by a professional fund managers who manage a group of stocks of different companies belong to different industry. It’s the responsibility of the fund manager to buy and sell individual stocks of good companies in the fund to try to make the overall value of the fund grow.

After getting a good amount of return on there investment, they pay a portion of such profit to the individual investor who invested there money in to mutual fund. This is the best way of investing for those investors who are unknown to stock market or who does not have time to track stock market.

Editorial Staff at Yourfinancebook is a team of finance professionals. The team has more than a decade experience in taxation and personal finance.