Face your Fears — What Spooks you from Investing in Stock Market
Hey Friends, I am sure that our last post here would have provoked many of you to do some soul searching about what is dissuading you to invest in the share market. Whether you are like me who just loves numbers and growing numbers, especially money thrills you (he…he…he…) or you have some financial commitments planned in the future and you genuinely want to be free from the financial shackles, whatever may be your reason… making money work for you to earn more money would be a really smart thing.
I do not say that this is the only way to create wealth, there may be many diverse ways such as starting your own small venture, investing in classical fields such as buying gold, real estate, or simply investing in saving account/ fixed deposits/ recurring accounts. These will surely help you to save money and maybe grow it too… but, these all methods require money and that to either a regular money stream such as salary or a large fund at the beginning itself to start investment. Therefore, I will strongly recommend people like me, with big enough hunger but limited resources, to seriously consider stock market investing as their ladder to success and towards financial freedom. As we discussed in the last post too, it is necessary that we get convinced about the genuineness and advantages of share market investing over other investment tools before we resume our journey to learn and earn… more and more. Therefore, let us tackle our fears, doubts, or apprehensions one by one in a systematic manner, and let’s bust myths together.
# Myth 1 — Stock Market Investment is like Gambling — The answer is an emphatic no for educated investors. If you follow the rules of investing, the probability of you making money increases in proportion to you being disciplined with your rules. But, if greed and fear are the only markers to guide your investments, chances are that you will be in a net loss. The good news is that it is easy to turn your fear into caution, and greed can be reined in by mathematical models forecasting price momentum. Therefore, all you need is to invest a little time in this field along with your money. More fear should induce more caution, and that should prompt you to research more in this field. Is farming gambling??? certainly not if you follow the latest scientific methods, estimate your earnings from that season, and insure your crop. The same is applicable here, you can minimize risks by rule-based investing and maximize profit by choosing the right shares at the right time while always keeping a tab on your fear and greed.
# Myth 2 — It is not for people with Honest Income — How is that so????? If you have no problem enjoying interest from your saving bank account or FD, you should not have any problems with income from stock market investing. Ideally speaking, when you invest in IPOs (Initial Public Offers), you are investing in the creation of businesses that will generate employment, boost the economy, and provide good products to the end-users that are consumers… isn’t that a matter of pride???? When the business starts to do better and better and generates profits, the price of shares will rise too, creating wealth for the company, its employees, and investors and probably making you richer too… so what is wrong with this?????? If you invest in a business through secondary market (resale or daily trading), even then, you are supporting a business, and fundamentally you own a part of that company, which should be a matter of pride. I certainly take pride that I am one of the owners of Reliance Industries…ha…ha…ha!!! Seriously, think it this way…if you have built or bought a house and sell this after some time…will you expect some profit for your investment??? The same is true in stock market investing. The only difference is that it is easier to buy or sell shares than build and sell a house.
If your notion is that the money earned from the stock market is illegal…please dispel this thought immediately. Every singly rupee you earn here is reflected in the Tax Credit Statement (Form 26A-TRACES) prepared by Income Tax Department, and you would be taxed on the income generated from the stock market. If the government is collecting taxes from you on this income, how can it ever be illegal??? Here, I will also advise my fellow young friends, who are above 18 years of age, to start filing Income Tax Returns, even when the total income generated by you through the stock market falls in the tax exemption category.
# Myth 3 — I Barely Have Any Money for Investment — Nothing can be farther from the truth than this statement. If you look around, you would notice that even insects and plants save food for the difficult season. The same is true for us also. All we need is a little will and discipline. We always have some money left in our accounts which we cannot withdraw from ATMs or banks because it is lesser than the least permissible limit (generally Rs 100/- ). But do you also know that there are many good shares which are trading at tens or twenty??? Invest this money in such penny shares for a short duration. If you have done your research well, you may get some profit from this trade too, but keep monitoring such shares on a regular interval to protect your funds. Whenever the shares from your wish list come to your buying zone, sell these penny shares and buy your dream shares. It is like swapping cards, to get the card you want to collect, you often traded many low-value cards… simple….isn’t it???
It is not important that… how many shares of a particular company you have bought or… how much money you have invested in that company…the only important thing is, how many percent returns that investment has generated. Firstly, it will give you immense satisfaction to see your money grow, similar to pleasure being experienced by a hobby gardener when he sees a growing plant. Secondly, not only this will help you to be disciplined with your finances, but it will also help you to test your investment strategies with the least financial risks. Before you even realize it, you would have saved a decent amount and would have gained valuable confidence in your strategies to take bigger steps in investing.
There are many many more myths, worries, apprehensions which I would like to tackle head-on…or should I say, would like to catch the bull by its horn, but I am constrained by the length of this post and hence will discuss these in Part II of this post. If you too have such concerns, please take them out of the closet, and let’s look at these, threadbare in bright light. I am sure many of these spooks will vanish the minute you take them out from their hiding places.
That’s all for this post, folks. I sincerely hope you enjoyed some light but important reading about share market investing. See you next week, where we will bust some more of these myths and do a comparative analysis of expected returns from various investment instruments. Please do like and share the post with all your friends and family also let me remind new readers to hit the FOLLOW button on the top left before you leave the page.
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Face your Fears — What Spooks you from Investing in Stock Market was originally published in The Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.
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