Short term investing in the stock markets in India makes no sense as it simply cannot make you rich overnight. On the contrary long term investing in the stock markets in India is a rewarding experience but requires patience, commitment, and will power to remain calm when the market fluctuates.
Managing your stock market investment portfolio can be a complex and time consuming process. A DIY investor may miss out on small but important things which a professional investment advisor would not. Expert advice can pay for itself many times over in the form of excellent returns and a stable investment portfolio.
The key to wealth creation from stock markets is having a long-term view on quality businesses without frequent churning of the portfolio. Here are three important lessons which can help stock market investors to create sustainable wealth.
By taking your packed lunch to work, you can save a lot of money. It is not just economical but also healthier. The most significant benefit is when you make a long term investment with the saved money to create wealth. By saving a nominal amount each month, one can retire rich after 20 years.
Investing in large caps stocks at over-stretched valuations means getting trapped at higher prices, if a significant correction happens. So one can either wait for a correction in the stock markets in India to invest in large caps or look at small and midcap stocks.
Stock market investors love bull markets. And why not. There are euphoria and optimism all around. When every stock you are investing in is going up, how could one be wrong? But beware there is a dark side to bull markets too.
Every investor in the Indian stock market fears the bears. And when the bears come and hit the investment portfolio, many investors exit from the Indian stock markets, vouching never to reinvest. Always remember, real fortunes in the stock market are made during times of economic distress.
The Union Budget plays a vital role in allocating funds to sectors, where it is required the most. Budget is also important from an Indian stock market investor’s perspective as it can give a vital clue regarding the sectors which one should invest.
As always, the budget has evoked mixed responses from the general public as well as Indian stock market investors. To help you better understand certain key announcements of the budget and its potential impact I have decided to decode it in a simplified manner.
In Budget 2020, the Finance Minister has proposed new income tax slabs and lower rates. Under the new income tax regime, income tax rates are optional and are available to those who are willing to forego some exemptions and some deductions. Let’s take a look at two cases to better understand this.
Budget 2020 has delivered on most of the parameters which would enable India gear itself for the journey towards doubling its GDP to $5tn by 2025. Central theme of the budget is enhancing consumer spending & farm incomes, developing infrastructure and divestments, etc.
It is impossible to predict when history might repeat itself, and another 2008 like stock market crash might happen. That's why you need some excellent defensive stocks in your long term investment portfolio.
It isn't very easy to predict the stock market in India in the short term as there are too many factors affecting it. History reveals that markets have always been stable over the long run, as compared to high volatility in the short term.
Pandemics like this do have the potential to trigger a broader correction in Indian stock markets. But, the impact if any, would be very limited, resulting in few months of volatility at the most.
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