SHARES : GOOD INVESTMENT OPTION
An investor has numerous investment options to choose from. Different investment options have different rewards and risks.
Investment in Equities or Shares offer the opportunity to enjoy high returns, But, it also exposes investors to various kinds of risk. However, Intelligent Investing for the long term and in a disciplined way can almost eliminate the risks and have the potential to give magnificent returns.
WORLD CONTEXT:
World over-investment in equity as a class of asset has given higher returns in the long term period than any other class of asset like Land, Gold, Debt etc. No wonder 49% of Investors in the USA invest in equity compared to only 3% in India.
INDIAN CONTEXT:
Sensex VS Gold:
SENSEX has grown from 100 since its inception in 1979 to around 83000 now, giving a compounded Annual return of 16.11% p.a. in the past 45 years. Dividend Income 1-1.5% p.a. is EXTRA.
Comparatively, Rate of return from Gold during this period is only 10.11%.
Shares VS Land:
Investment in equity is better than Land in following parameters:
Shares are generally liquid assets. We can mostly sell & get our money in 3 days. However, Land has less liquidity and sometimes urgent sell may lead to a discounted price, sometimes there is no buyer at all.
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Sale of land involves a lot of hassles, risk of big money etc.
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Some Investors have ill – notion that land is asset and share is ‘paper’ asset The truth is that both land and shares are a paper asset. Land Title deed ascertains land ownership. Shares ascertain Business/company part ownership. Land ownership is only ownership of Land. Shares ownership is ownership of Land + Income from a business on that Land.
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Share investment can be done on a small amount and divided into several good companies reducing the risk of investment in a single company. But in the case of land, investment is big and it’s a single item at stake.
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Ownership wise shares are safer and can be held easily in Demat a/c as similar as cash in bank a/c. Demat a/c are under NSDL/CDSL, which are Govt controlled entity. The land is at risk of encroachment etc. if not adequately handled.
High return from shares:
Return from share investment is not confined to SENSEX growth only. Selections of right share at the right price can give us exponential return.
World biggest Investor in share market, Warren Buffet, USA earned huge wealth (12 Lac Crore approx value in 2024) through prudent investment in share market. He is one of the wealthiest person in the whole World. In India, CA Rakesh Jhunjhunwala, Mumbai had amassed huge wealth through proper investment style in share market. His equity holdings was worth 40,000 Crore in 2024. It is rumoured that he started investment 45 years ago by just 5000/-.
These personalities have emphasized on long term strategy of investment in shares. One should remember “WEALTH CREATION TAKES TIME”. There is no shortcut.
Good Investment Advisor is extremely helpful to achieve high returns:
Reducing Hassles and Managing Investment:
To get good returns one should have adequate knowledge, do thorough research and track the companies’ 24×7 basis, which is very difficult by a normal person engaged in his business (or) profession. Therefore, the help of capable Investment Advisor is a must.
Magic of compounding:
A return rate of 34% (double of average Sensex growth p.a.) will multiply your investment to 19 times in 10 years.
IF We invest Rs 10 Lac today, It will swell to 43 Lac in just 5 years!
1.87 Crore in 10 years!
34.84 Crore in 20 years!
650.35 Crore in 30 years!
The proper time to Entry/Exit:
Good Investment Advisor can help us to exit from the market partly/fully to minimize risks or increase/consolidate gains at opportunistic time should the market fall and re-enter at an appropriate time.
Diversification:
A Capable Investment Advisor help will be useful to achieve adequate diversification of investment into various sectors/companies.
Fluctuations in the market:
Share prices fluctuations happen due to a large number of interested investors/players in the market who assume a particular price for a company based on present/future fundamentals. During the bull run, greed sentiments may lead to higher prices. Conversely, the price may fall due to bad economic conditions/fear sentiments. Professional help will guide an investor to protect him/herself of losses from fluctuations in the market. We should try to benefit from the folly of the market rather than get disturbed by it.
Day Trading/Gambling:
Some persons indulge in day trading in shares i.e. buy/sell many times a day without any reasonable economic reasoning. Generally, company fundamentals don’t change in a daily/hourly basis. Thus, Day trading is very risky and it may lead to huge losses.
Future outlook:
India is already fastest-growing major economy in the World. Chances of gains from share market is bright.
Conclusion:
Investing in Shares through Good Investment Advisor is desirable as it gives us a great chance to increase our wealth at minimal risk.