Can Stock Market Make You Rich: Interest in the stock market has skyrocketed post the pandemic. A testament to this has been Zerodha’s growth over the past few years.
The company was founded in 2010 thanks to the growth in the stock market its user base has swelled up too which has been reflected in its profits.
The markets haven’t seen this many users in their entire history. So what is the driving force behind such interest in the stock market? Can Stock market make you rich?
We’ll try and answer these questions in this article so keep reading!
Investment Opportunities In The Stock Market
One of the main factors for the surge in market participation is the onset of the pandemic. This also meant taking a serious look at the allocation of wealth – For emergencies,
For retirement, and for buying up significant assets such as real estate. To achieve even one of those goals ultimately meant looking for other opportunities to grow wealth.
The stock market has different types of securities, not limited to stocks, that can help investors grow their wealth.
Can Stock Market Make You Rich?
The stock market can indeed make you rich and grow your wealth. It takes having certain skills, knowledge, and understanding of the market and your goals.
To actually use the stock market to get rich, you must have a clear understanding of two things – Your financial goals and proper knowledge about the markets.
Here’s a list of the assets that you can use to make money over time.
Equity refers to the listed securities in the stock exchanges. Here, stocks of publicly traded companies are bought and sold for both trading and investing on a regular basis. Equity shares give investors voting rights, and occasionally, dividend payments.
Such shares are bought under the assumption that they will grow in value over time and then sold for a much higher price. This results in what we know as capital gains.
2. Mutual Funds
Stock picking can be quite tedious, especially for first-time investors who have never bought stocks. To investors who cannot actively manage their portfolio, mutual funds are one of the best options in the market.
Mutual funds are smartly structured for every type of investor – conservative, risky, dividends, and debt-based.
Investing is not the only way through which people make money in the stock market. Most of the volatility and movement of the stock market comes from trading.
Even within trading, there are different approaches such as futures and options, intraday, forward contracts, etc.
How To Get Started?
Here are some investing terms and points to keep in mind to get rich in the stock market.
1. Capital Appreciation
Regularly investing in the market allows your investments to grow and over time, undergo capital appreciation. The compounding effect in the stock market is one of the biggest reasons people invest.
It also effectively hedges your investments and savings against inflation. While it is necessary to have some cash in hand at all times, savings doesn’t protect you from inflation in the long run.
2. Dividend Investing
Dividends are the extra rewards given to shareholders through extra shares or cash. Dividend investing is when you only buy and hold stocks that pay regular dividends.
It is perfect for the type of investor who wants something extra from their investments, apart from capital appreciation.
The stock market isn’t limited to any single industry or sector. It allows you to hold multiple stocks across different sectors, which effectively allows you to create a diversified portfolio.
If you want to take the passive approach and invest, there are many mutual funds that hold diverse stocks in the fund.
4. Picking An Investment Style
The market gives investors room to pick the strategy that works best for them. It could be value investing, growth investing, dividend investing, or mutual fund investing.
It depends on the goal timeline, the risk tolerance, and the investment goal of the investor. With time, consistency, and patience, you can achieve your investment goals.
Also Read – Difference Between Long-Term Capital Gains & Short-Term Capital Gains
We hope you found this article helpful in answering your question – “Can Stock Market Make You Rich?” Over time, the markets grow, despite short-term volatility and macroeconomic conditions.
It sometimes takes many years before investors can see the rewards for their investment patience. But over time, your wealth will grow and add value to your overall net worth.
If you’re looking to get started like the millions of investors who have already begun their investing journey, check out our courses on Join Fingrad to see how you can begin too. Happy Investing!
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