Benefits of Investing in the Stock Market

The stock market is a place where buying and selling of stocks are conducted. The shares are of publicly traded companies listed on the stock exchanges of the world. Several brokers are present across the market to carry on these types of financial activities. There can be more than one stock exchange operating in a particular region or country. When a trader buys and sells shares, it is known as share trading or stock trading.

Companies use stocks to raise funds from the market, and investors earn dividends in return of this. Apart from the dividend, investors also earn capital gain for holding stocks in the market on the basis of time period. The stock market can be of two types that are:

Bullish Market

Bullish market defines the rising nature of the market. It is derived from the name of a bull which also denotes speed. During the bull market, the prices of stocks rise for almost all stocks and this market also generate higher returns.

Bearish Market

Bearish market defines the falling nature of the market. It is derived from the name of a bear which is also known for its slow and lazy attitude. During the bear market, the prices of stocks fall for almost all stocks and investors try to take their money out from the market.

How to Earn Returns from the Share Market?

Stock exchanges provide a platform for the buying and selling of stocks. Investors can invest their money in stocks and wait for the market prices of the stocks to rise. When a company will perform well, the market prices of its stock will rise and also the profits of the company. Higher market prices of stocks lead to capital gain.

A company can also share its profits in the form of dividends between the shareholders. Online platforms are used for all the process of buying and selling shares online. Technology is ruling over the market and now shares are not traded in the physical format. Investors can generate higher returns from trading in the stock market. The stock market is having it own advantages and disadvantages.

Benefits of Stock Market

Trading or investing in the stock market has multiple benefits. Here are some of the benefits of trading in the stock market:

High Liquidity

The stock market goes through high volume of everyday transactions, which means it is highly liquid. In short, you can carry on transactions like buying and selling of shares easily. Investors are available in high volume which makes converting of cash into shares and shares into cash easy.

With the help of brokers you can trade in stocks. Within a few seconds you can complete any transaction between you and the share market.

Versatile

Investors of the stock market are having a wide range of investment options to choose from according to their requirements. The stock market is offering options like bonds, shares derivatives, mutual funds, and many more. All these options provide diversification to your portfolio and diversification means risk diversification also.

Large Returns in Shorter Period

The stock market can generate higher returns in even shorter periods of time. When we compare stocks with other financial instruments such a fixed deposits and bonds, they are way better than these. Start with low amount and gain experience in the share market.

Dividend Income

Not all stocks offer dividend income but some of the stocks offer dividend income. A dividend is a part of the profit earned by the company and distributed between shareholders on a proportionate basis. No matter what is the current value of stocks of a company, the dividend distribution does not depend on the stock market value.

Investors portfolio grow even more with the help of dividend income. It is a form of additional profit apart from, the gain which you will earn after selling the stocks.

Provides Ownership

Buying shares of any company also gives an ownership stake in the company. When you purchase shares of a company you are entitled to take part in the decision making process of the company. Shareholders can vote on several business decisions and corporate board members. Companies give annual reports of to its shareholders for better understanding about the company.

Advantageous in Growing Economy

A growing economy means corporate earnings are also on the higher side. The stock market performs really well during the growth period because the growth period means higher jobs, higher income, and higher sales. Earning more income will create more demand. Hence, the stock market will increase and you will get higher returns.

Regulated by SEBI

The stock market is regulated by the Securities and Exchange Board of India (SEBI). It is a regulatory body that regulates the trading of shares in India. There are many other regulatory bodies that are operating globally. It is to ensure the security and interest of investors across the world.

These are some of the benefits of trading in the stock market. Investing money in the share market can fetch higher returns and it is very beneficial for investors.

Tips for Stocks Trading

Stocks trading tips can assist investors in getting higher returns from there investments. No matter if you are beginner or experienced trader, these tips will be beneficial for you. The tips are:

Stock market does not read sentiments of public. It only read the demand and supply of a stock in the market.

Keep your feelings outside the stock market and think how to gain more return form the market for your investment.

Trade companies and not the stocks, which means invest in companies with better growth model in the near future.

Do not just analyse the market value of stocks and past performance before investing in the stocks of any company.

Knowledge in the powerhouse for stocks trading and decision making in the stock market. Use it wisely when trading.

Study the factors affecting market’s performance and analyse the future conditions before you invest your money in the stock market.

Analyse your power of risk taking, which also means how much capital you can invest in the stock market.

Keep an eye on the stock market constantly and watch for new opportunities by which you can gain good returns.

Start with smaller investments and try to grab more and more experience before investing large amounts of money.

To avoid illiquidity, stay away from penny stocks. They are riskier than a stock which is on the same price for past five years.

Traders do not earn same percentage of profits on every trade, sometimes you have to suffer loss also while trading.

Choose Reliable Brokers

To start trading in the stock market, you will need a broker because with the help of broker only you can invest your money in the stock market. Here is a reliable broker for you.

HFTrading

HFTrading is a trustable broker which does not charges commission on trading and offers a demo account for trading. It is a useful feature for beginners and experienced traders also. A high leverage is offer by this broker which is of 1:500. It runs on MT4 trading platform and several types of deposit and withdrawal options are available with this broker. You can choose an option as per your convenience.

It is offering a wide range of educational material to the traders such as eBooks, videos, tutorials, and courses. You can learn various things using these educational material. It is regulated by ASIC and FMA.

ROinvesting

Another trusted broker on our list is ROinvesting. It is offering a wide range of financial assets apart from, shares and charges no commission on trading. It is regulated by CySec and use MT4 trading platform. Traders can also opt for a demo account with this broker and practice before you invest your money in the market.

ROinvesting offers educational material to investors like eBooks, videos, trading courses, and tutorials. These will help you in better understanding and decision making regarding your investments. With a maximum leverage of 1:500, this broker is also offering customer support through various mediums such as live chat, email, and telephonic conversation.

The Bottom Line

Trading in stocks is highly profitable, you just need to analyse the situation about when to invest money and when to take your money out from the market. There are multiple benefits of trading in the stock market as the market is having multiple instruments also which can be used for investments. They can be used for diversification of your portfolio.

One of the most important things is that while trading you have to keep your emotions aside and focus on the performance of the stock market. Select brokers which are having multiple features and can assist you in stocks trading. Take advantage of the tips discussed in this article for better trading experience. So, make decisions wisely related to trading in the stock market.