investing in stocks would be an easiest thing untill you start doing speculation with it. in past times the stock market had shown a higher level of growth and greater opportunities to gain good returns from it. there are various reasons for which you must start invest in stock market or a beginner must start investing in the stock and get profit out of it. so in this article you can get to know about top 10 reasons to invest in stocks, benefits of investing in stocks, etc.

top 10 reasons to invest in stocks.

is it right time to start invest in stock market.

benefits of investing in stocks.

is it a good idea to invest in stocks.

is it better to invest or save.

how do you profit from stocks.

while starting invest in stocks, most of the peoples used to keep a proper reason for which they were started investing. so choosing a reason before starting investment would be a good option as it helps to be self motivated for timely investments.

top 10 reasons to invest in stocks.

long term capital gains (ltcg) :-

long term capital gains is a short aspect of stock market but the major reason for which investors used to keep this in mind while starting invest in stocks. so while investing in stock market the user have two options that is of intraday based trading and delivery based trading.

in intraday based trading, the trader could be able to do transactions on the same day. but it cannot be included in long term capital gains (ltcg) as the transaction of buying and selling held on the same day and the profits gained would depends on the difference amount from the amount invested to the current market price (cmp).

long term capital gains is actually a concept related to delivery based trading, in this mode of trading when an investor holds his positions for longer time i.e. more than one year, the returns gained on the initial investment would considered as the long term capital gains.

passive source of income :-

nowadays, most of the peoples wants to generate a passive source of income from where they can keep on getting sufficient funds to move smoothly. so investing in stocks helps to generate a passive source of income as its stock price always keeps on fluctuating due to volatility and some other sources.

dividends, bonus shares, shares splits are also a major reason for which you must start invest in stocks immediately. choosing a high dividend yield stock for your portfolio helps to keep you provided a passive income on regular basis.

bonus shares and split shares also helps as a passive source of income as bonus shares helps directly to raise the value of portfolio by adding extra shares as declared accordingly and split shares helps in dividends occupying capacity.

tax benefits :-

invest in stock market through mutual funds helps you to reduce the taxes and provide a greater tax benefits. the taxes that levied on the transactions would be based on different aspects like long term capital gains tax (ltcg tax), long term capital loss tax, short term capital gains and so on.

investing for less than 12 months i.e. short term capital gains were taxed at 15% on total returns. but long term capital gains i.e. investing for more than 12 months were taxed at 10% on total returns. apart from that the long term and short term capital losses were get carry forwarded for the next financial year for the settlement.

as mentioned above investing in stocks through mutual funds helps to reduce taxes to a greater extent as some of the mutual funds provide equity linked saving scheme facility (elss) in which the long term capital returns taxes would be null upto 1.5 lac rs and above that the taxes would be levied at 10% on total returns under section 80c.

financial goals achievements :-

financial goals achievements is one of the major reason for which peoples used to save their money. they used to save their money in bank's saving accounts, fixed deposits, recurring deposits, government saving schemes, etc. these things helps to secure the money however the returns gained on saved money wouldn't enough to acieve the financial goals.

so, investing in stock market helps to get higher returns on the invested amount as the average returns provided by the stocks would mostly be around 15% to 20%. however investing in stock market would be risky so you can diversify your portfolio by adding equity, mutual funds and debt funds, to secure a part of your money.

you can also buy shares of different companies by analyzing the companies financials and fundamentals and diversify the portfolio accordingly to get greater returns even by taking lower risks.

inflation challenges :-

inflation challenges is also a major reason for which most of the peoples used to invest in stocks. saving money in bank accounts, fd's and rd's won't provide the returns according to the rise in the rate of inflation. but stock market does provide enough returns to deal with inflation.

in india, the average inflation rate is 5% to 6% through which it increases year over year (yoy). the saving accounts and deposits accounts also provide the total returns of 6% to 8% on year over year which means the total returns is not enough according to the financial goals and plannings. on the other hand the total returns expected from the stock market would be around 15% which actually helps to deal with the inflation.

effortless work :-

investing in stock market requires very low efforts or completely no efforts to passively grow your capital amount you invest it is also a basic reason for which peoples invest in stocks. you just have to put some efforts before investing the funds in a company stock.

while investing the money you just have to find a quality stock by analyzing the company financials, its fundamentals, company's growth, etc. after selecting a quality stock the only thing's remaining is to invest funds in the company through a broker.

after buying the stocks of the selected company you just have to hold the positions for long term to get higher benefits out of it. as there is no work or efforts that one have to put personally so it is also like by many of the beginner traders.

power of compounding :-

power of compounding is one of the best reason for which peoples invest in stocks. according to "albert einstien" - "compound interest is the eight wonder of world he who understands it, earns it... he who doesn't, pays it..."

mostly peoples used to save their money in banks and other deposits which provides them returns on simple interest basis. but stock market provides interest on compounding basis, but one can see this effect after holding stocks for long term.

the berkshire hathaway's warren buffett, a greatest investor of all times had accepted the compounded annual returns of around 20% from last 5 financial years. so for that reason investing in stock market would be a good thing to increase the capital funds.

easy deposit and withdrawal :-

depositing and withdrawal of funds in stock market is very easy. according to "warren buffet" - "buying and selling of shares from stock market would be as easy as buying a burger"

to invest in stock you have to select particular shares and a broker through which you can create your demat account and hold your shares. the withdrawal process is also as simple as buying a share as you just have to verify the share holdings in your demat account with the tpin and place the order to sell the open delivery or intraday positions.

build investing habit :-

building an investing habit is also a good reason for which investors selects the stock market to invest. there is an aspect of systematic equity plan (sep) similar to mutual funds systematic investment plan (sip) in which a particular selected amount would get automatically deducted from the account on a particular date.

investing in other investment options like reit's, fixed deposits, etc. cannot provide this type of option, rather than that recurring deposit provides the facility to invest on monthly basis but the returns on investment (roi) is not so attractable so for that reason peoples used to invest in stocks.

enhance investing knowledge :-

investing in stock market helps to enhance the knowledge of investors. it helps to enhance knowledge in well-versified way. it helps to improve decision makings, reading charts and graphs movements, analyzing fundamentals of the company, etc.

apart from that it also helps to improve the knowledge regarding market needs, the bullish and bearish markets, to see the vision of the company, etc.

is it right time to invest in stock market?

yes, it is a right time to invest in stock market, as the market is passing through a post covid recovery period. for that reason there are still such company's shares which are getting traded under its initial value. so investing in those shares could be a great option for short term gains because holding those shares might be a quite risky for long term as its taking much time to get recovered from the impact of covid which means companies fundamentals are weak for long term basis.

according to some experts you can invest your money in stock market according to your age. for example if you are a teenager than even if you don't do higher research before investing than also you have chances to make profit but for that you just have to keep your holdings for long term. if you are thinking for long term investment than it would be a good time for you to start invest in stock market.

other than that the peoples above the age of 40 must do proper research before starting invest in stocks, as the amount they will invest in stock market would be their lifetime earning and for that reason invest through a diversified way would be a good suggestion for the peoples above age 40. the diversification of portfolio must includes equities, mutual funds, debt funds, etc to reduce the risk as many as possible.

benefits of investing in stocks.

there are so many benefits of investing in stock market for which most of the investors choose stock market as there investment options. it is the only source which provides highest returns in all other investment options.

capital gains :-

capital gains refers to the actual returns received on the basis of the initial investment. in stock market when a listed company's stocks make fluctuations for example if the share price move up then it could be considered as the capital gains because the returns were received on total invested funds and vice versa. to get higher capital gains most of the peoples used to hold their positions for longer time.

dividends :-

dividend is one of the major benefit for which most of the investors used to invest in stock market. when a company makes extraordinary profits from there sales or services they have some options to reuse that money for growth of the company or they can gave that extra money to their investors in the form of dividends.

after the post covid recovery period most of the companies had earned extraordinary profits and they also declared higher dividends to their stakeholders. it could be considered as a passive source of income.

bonus shares :-

bonus shares is also comes under benefits of investing in stock market. it rarely happens that a company declares bonus shares to their investors. bonus shares given by the company only to its existing share holders on the basis of the shares he owns.

is it a good idea to invest in stocks?

yes, due to the wide range of reasons and so many known benefits it's a good idea to invest in stock market. investing money in another investment options can helps to keep your funds secure but it will not grow by providing higher returns. however investing in another options may also includes risk but that would be manageable.

however investing in stock market may includes risk but it also provides good returns technically. however one can also reduce the risk here by diversifying your portfolio by including different sectoral company's stocks in the portfolio.

most of the peoples have these kind of queries due to lack of knowledge and information about stock market. because from last decades it is the only option which provided higher returns from other investment options. apart from that it also provides benefits like dividends, bonus shares, etc. which is not provided by any another investment options.

is it better to invest or save?

investing your money and saving your money would be two different things. there are various reasons for which one can start invest in stocks. according to a greatest investor of all times "warren buffett" - "don't work for money, put your money to the work".

saving can help you to keep your initial fund secure because the returns received on that is not enough to deal with the financial problems or to deal with the rise of inflation. but investing in stocks helps to achieve your financial goals as well as the rate or returns provided by these investment option is also higher than other sources of investment.

how do you profit from stocks?

the best ways to get profit out of stock market is through long term capital gains and dividends. these are the two major things by which an investor makes profit from stock market. here dividends are the part of earning that a company earns on QoQ basis or on YoY basis. it declares dividends for its stakeholders on the basis of the stocks they hold.

the capital gains or the capital appreciation is the major way through which the investor gets the profit i.e. buy at lower price and sell at higher price. apart from these still there were some other sources which helps them to earn profits for example split of shares, buyback of shares, etc.

top 10 reasons to invest in stocks | how do you profit from stocks.