Minggu, 31 Januari 2010

Investing in the Stock Market

Investing in the Stock Market

It really surprises me when people say that they are afraid of investing in the stock market. They argue that, I prefer to invest safe and that’s why I invest in the bank fixed deposits, bonds and debt instruments. Because I want to play it safe.

But well, let me tell you that, the Bank Savings Accounts, CDs & Fixed Deposits are also not the 100% safe because here also the risk of inflation eroding the purchasing power of your money over the time. The main problem is that, people can’t see the inflation and that’s why they assume that it doesn’t exists. But the thing that you can’t see doesn’t means that it doesn’t exists.

Inflation & Tax both are the silent killers of your money. Both of them will slowly erode the purchasing power of your money but Stock market Investments don’t attract any long term capital gains tax if hold for more than 1 year period as well as they beat the inflation very well in the long run.

In the United States, the inflation is 2-3% per Annum and the Stock market returns in the past 20 years is 11% annually on and average & that is 8-9% actual annual return from the stock market in the long run. Now, this is amazing. No other Asset class in the USA has given this much return in the long run after beating the inflation.

And that’s why I advise people to invest in the stock market. Now, by investing in the stock market doesn’t mean trading in the stock. Investment means pure long term investments based on the fundamentals of the companies.

Mutual Funds Versus Direct Stock Investing -

In the United States, most of the people don’t have any time to manage their own investments and that’s why the concept of mutual funds came into exists. Mutual Funds pool the money from several small investors like you and me and collect the large amount of capital. It has it’s own fund manager and the team of research analysts.

The Fund manager invest your money on behalf of you and make a portfolio for you. However, the Index mutual funds have given much more return than the actively managed funds in the long run because the index mutual funds are associated with very low fund management charges.

Vanguard Index Mutual funds are the best long term investment vehicles in the USA.

The earlier you start investing in the stock market, the more compound interest will work in your favour and make you rich over the time. And that’s why i advise people to start investing in the stock market as early as possible means NOW.


The Best Time of Investing in the Stock Market was 20 years Before &
The Second Best Time is NOW…So Start investing in the Stock Market NOW…!!!

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