Are You Losing Out on The Power of Equities?

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  • 23 Jan 2023
Are You Losing Out on The Power of Equities?

Investing is an important skill that everyone needs to learn. If you are in control of your finances, you can be in control of your life. Investing in equity is considered to be the best option for long-term growth, wealth accumulation, and earning higher returns. The stock market contributes hugely to the growth of the Indian economy.

Investing In Equities Is Healthy For Your Portfolio

1. Infatuation with traditional investments:

Traditional investments like fixed deposits, gold, post office savings schemes, and insurance products are the most preferred investment options in comparison to equity investments and equity-oriented mutual fund investments for the sake of safety returns. A survey conducted by the Securities Exchange Board of India (SEBI) reveals that nearly 95% of the Indian households then preferred investing in fixed deposits and only 10% preferred investing in mutual funds and stocks.

However, many people have realised the importance of the right investment in the past few years due to the pandemic. There is a rise in the number of women investors too. However, A recent study conducted by Zest Money, India’s largest and fastest-growing ‘Buy Now, Pay Later’ platform reveals almost 59% of women prefer investing in gold and fixed deposits and 31% are inclined towards direct equity and mutual funds’ investments.

2. Stock market investing needs research:

Many investors face challenges when it comes to selecting the right stocks to invest in. The lack of expertise, time, and resources to find the right stocks for long-term growth pulls back many investors. Even with the limited time and expertise, can you get the potential return from the stock market? Yes! Equity mutual funds are a suitable match for first-time investors to get into the stock market before they eye on investing in the right stock. Equity mutual funds are managed by professional fund managers who will build a portfolio suitable for your goal.

3. Significant opportunities for value buyers:

Be it pharma, steel, or paint, there are many industries that have huge potential for significant growth over the long term. As per International Monetary Fund’s (IMF) forecast, the Indian economy is expected to grow at 8.2% in the fiscal year 2022-23, which is by far the best growth rate of any major economy across the world. Looking at the growth projections, there would be significant opportunities for investors to grow their wealth over the long term by investing in equities of companies that have huge growth potential.

4. Equities for inflation-beating returns:

Equities are always the winner when returns delivered by asset classes over the long term are considered. When you look at the traditional investment options like Fixed Deposit, Public Provident Fund, Recurring Deposit, and National Savings Certificate (NSC), you cannot expect inflation-adjusting returns as they are vulnerable to inflation. Equities and equity-oriented investments are one of the best options to generate inflation-beating returns over the long run. You can participate in equity markets by starting to invest in mutual funds first through systematic investment plans (SIPs) and then go for direct equity investments by understanding the market with time. Investors needs to understand the power of equities and take the risk of investing in them for long-term capital growth.

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