Stock exchanges are commonly connected with betting. In several towns, the lane in which the futures markets are located, be it for commodities or stocks, is known as Satta bazaar ‘, and those linked with it, labelled as gamblers. This is the reason why only over 2,000,000 people take part in secondary markets and about 30,000,000 out of a 100-crore population hold shares. Elders and grandparents will typically offer cautionary words of information to those needing to enter any activity in relation to share markets. Actually there had been a point in time when it was tough to gain a matrimonial coalition for somebody experimenting in stocks and shares.
Let us thus understand the difference between betting and speculating. Some of the preferred betting avenues are : gambling on cricket, soccer or horseracing, the result of an event , for example a lottery, casino games, or an easy toss of a coin. These events don’t have a risk part : that is, cricket is a sport that’ll be enjoyed regardless of who wins. At the very best if the local side loses, the crowd may get saddened. A viewer won’t lose money, simply watching the game. But if he gambles on the results of the game by putting down his capital, a risk part gets made. So, there isn’t any risk as such with the event, but gambling imputes the chance.
Now let us look at share investments. When we have money, there is always risk — of devaluation due to inflation if we keep the money idle, of it being nicked or spent by near and dear ones, of investing in low-return options, which we term loss of opportunity ‘. Hence, by investing the money, we are making an attempt to minimise the danger already present and get a higher return by identifying better-income avenues. There’s no creation of risk.
The volatility in the markets is also a reason cited for pertaining to shares an untrustworthy form of investment. People mention that markets change each day, and that stupidity and fear of loss of capital hold them back. But volatility should be looked on as a break. If the market is not volatile, there’d be no opportunity to earn income. When the market goes up, there’s the chance to sell, and when it comes down, the chance to buy.
The other debate of speculators is : I buy high and sell low and lose cash all of the time. In order to earn income on the market there must be a long term engagement with the markets. Generally folks who say that they acquired high and sold low are those that enter the market at the top of a bull run because they feel ostracised when this is building up. Right after, they’re left with high-priced stocks, patience runs out and they get rid of them at whatever price they get and take sanyas ‘ from the market. It’s necessary to be continually in contact with the markets to appreciate their swings and roundabouts and ride the wave to earn money.
The markets are unpredictable also because of operator activity and price rigging, a characteristic of betting, say disillusioned speculators. But there will be unattractive elements in each market. We must outline our area of operation and guard ourselves against such risks , which can sometimes be done by restricting our activity to An and B1 group stocks only which are very liquid, and not susceptible to manipulation. Going in for low capital and T2T items has a higher chance of price increase, with the appended chance of these being subject to price control. These shares have a low capital base ; thus, it takes really small money to rig the costs in the specified direction. After each bull run investors are marooned with stocks that have no liquidity, company addresses that are untraceable and other associated reasons that render the share valueless. This occurs because stocks aren’t purchased on merit but on rumors of operator activity.
A vital of exit levels vis desired returns and stop loss levels would also help the financier guard against capital depreciation beyond a planned level.
To conclude, fiscal planning is an absolute must for each family. It involves building up a portfolio of investments in varied instruments that not only meet your requirements of money liquidity but also acts as an earning partner. For we erroneously say that we are the only earning members of the family while ignoring the contribution that smart investments can make in sharing the load. A bit of time dedicated to monetary planning can cut back the burden multifold. Understanding the acceptability of each avenue in the right point of view can go a good way in augmenting the returns on your portfolio.