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Are stocks the best way to invest for you?

Mar-28-2022


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We've all heard about stock market heroes like Warren Buffet and Rakesh Jhunjhunwala, who have amassed staggering fortunes by investing in stocks. For many professionals, stocks have been a terrific way to build money.

Only two things can go wrong when investing in stocks:
1. investing in the wrong stocks and/or 2. investing at the wrong moment. You'll strike the jackpot if you get both consistently right and stay invested long enough to reap the benefits of compounding (read our previous posts to know more about compounding).
 
Isn't it simple? However, getting both correct on a constant basis is difficult. To buy in the appropriate stock, one must conduct thorough due research, and to invest at the correct time, one must remain a step ahead of the competition (experts) i.e. early buyers drive up prices and if you buy a good stock late, you may be buying it at an overvalued price. Many highly skilled and qualified experts also fail to get both timing and stock right on a regular basis.
Most of us who follow stock broker recommendations are even less likely to get both right, as the brokers' game is to make retail investors like us trade more frequently than necessary in order to generate more fee income.
 
As a result, the broker will persuade us to sell bad investments, which is fair enough. Brokers, on the other hand, will also force us to sell solid investments since they won't make any money if we don't. By design, retail investors are set to be doomed in this game.
In order to reap the rewards of discovering a fantastic stock at the correct time, one must stay the course and invest for a lengthy period of time. Markets, by their very nature, go through booms and busts, and it takes guts and commitment to stay involved during these trying times. 
 

Consider yourself a shareholder in HDFC Bank or Bajaj Finance, two companies that have generated enormous wealth for ordinary investors in the last decade. However, during the recent crisis, both of their stock prices plummeted by 40-60%. Stock market crashes are regular. Would you have the strength and conviction to continue invested while your hard-earned money is depreciating in value in a matter of days?

If stock investments are not for you or you are seeking other, less volatile investment types we recommend that you to try IndiaP2P today, it’s a great way to earn high returns without having to worry about making the right picks, timing the market, or experiencing significant value erosion during market crashes.

 

Author: Ravinder Voomidisingh

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