Before Entering The Stock Market, Know The Advantages And Disadvantages Of The Stock Market

Benefits of the stock market

The benefit of high returns: The biggest advantage of the stock market is that you can get good returns based on your skill. Hardly any other business can give you as much return as the stock market. If we talk about FD, it also gives you only a 7% return annually. Whereas the stock market can give this much in a single day.

Benefit of Liquidity: Due to high liquidity in the stock market, it becomes easier for you to buy and sell shares. Even if you run a shop, you will have to worry about selling goods there. But this does not happen in the stock market. You can sell what you have purchased at any time without any delay. And where buying and selling is easy, doing business is a different pleasure.

Advantage of Regulation: The stock market is regulated by the SEBI department of the Government of India. And the job of SEBI is to protect the interests of investors and prevent any kind of wrong activities. So you don't have to worry that someone will run away with your money. SEBI has kept a lot of control over the brokers. Brokers cannot tamper with your shares without your consent.

Advantage of Transparency: There is now so much transparency in the stock market that you can buy or sell any share through an online trading system through a broker. You can even place an order for the price at which you want to sell the purchased shares. Traders have benefited a lot due to the presence of online trading systems. Everything will be under your control, this reduces your trading cost.

Access to backend account: Your demat account is kind of like a bank account. You can get information about how much capital you have and which shares you have through your online demat account. In the future, you can withdraw your account information anytime through your PAN card. The overall thing is that you can get the information about what and where you have invested at any time.

Benefits of Part Ownership: If you like a company and you also like its future, then if you buy its shares, you get part ownership in that company. That means you become a partner in both the profits and losses of that company. And getting part ownership also makes you feel good. You cannot easily get a job in a big company, but you can become the owner of some part by buying its shares.

Voting rights: If you buy even one share of a company, then believe me you will also have the right to vote. That means, that whenever the company takes any decision, it will also allow its investors to express their views through voting. Many times it has happened that due to the decisions of the investors, the company is saved from making wrong decisions that are not in the interest of the company.

disadvantages of the stock market

High Volatility, more ups and downs: The biggest risk of the stock market is that there are a lot of ups and downs here. We also call this high volatility in the language of trading. Share prices rise and fall by 10 to 15 percent in a day. In simple language, there is a lot of turmoil going on in the stock market. Without knowledge, some investors lose their entire capital in a single day.

Impact of News: External things also influence the stock market a lot. If any negative or positive news comes, its impact is immediately visible in the shares also. Factors like budget, company results, and GDP greatly influence the stock market.

Lack of priority: If the company makes a profit then the share investors get the last share in that profit. The company's employees, creditors, and infrastructure are put before investors. If you understand the business carefully then there is no problem with it. If you have invested in a good company then you will not have much problem with this.

Emotional Decisions: Due to high volatility, share prices keep going up and down rapidly. New investors sit in the hope that the price of the shares they have purchased will go up. But due to the rapid fall in the price, they panic and sell the share at a loss and after that, the price of the same share also goes up. That's why many people get harmed here because of emotions.

High Brokerage: You need a broker to buy any share and that broker charges you a brokerage fee. It often happens with new investors that due to less knowledge, they work in the stock market and increase their brokerage charges where they have to suffer huge losses. If you do not pay attention to brokerage charges, it will be difficult for you to make profits.

Lack of awareness: There is not much awareness about the stock market in India right now. Instead of learning the stock market, people start investing in the tips and advice of others and end up incurring losses. New investors also suffer losses due to a lack of knowledge and awareness.

Taxation: If you work in the stock market then you have to deal with brokerage and taxes. When you start working in the stock market, you will have to pay very high taxes. But if we talk about any other business, you still get a good net margin in the stock market. Apart from the tax on trading and brokerage, you have to pay 10 to 15 percent tax on capital gains. This problem can be reduced with more knowledge of the stock market.

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