Investing in stocks has become a mainstay of the modern day Indian economy. An entire ecosystem of businesses and market players has been built around it. Brokers, Dealers, Underwriters, Bookkeepers, Investors, Day traders, Market researchers just to mention a few.
When done right, Stock trading can be highly profitable and rewarding. It did not surprise many when reports showed that over 40% of adults in developed countries own stocks. In the United States for instance, surveys show that over 55% or American residents own some form of stocks.
However, In India, stock ownership remained perennially underwhelming for decades. But that is just about to change. Stock trading has scored big among Indian millennials over the last few years. Many Indian Stock brokers have witnessed a strong influx of new investors in recent times, with majority of them being young people.
But just before we dive into the reasons behind the strong emergence of stocks among Indian investors, let’s do a little catch up of what a stock means.
Why Indians Millennials are Pilling onto Stock trading
A stock, otherwise called Shares, is the basic unit of a company’s ownership composition. It grants you a legitimate claim to a fraction of the assets of a company as well as a portion of its profit.
Here are a few reasons why investing in stocks is proving attractive among young investors in India.
1. It is a veritable source of Passive Income:
Buying, holding or trading in stocks enables investors to earn a healthy income money without having to spend all of your time working a day job. Many Indian millennials today are turning away from the traditional ways of earning a salary as a Doctor, Engineer, etc. There a growing fad among young people who wish to pursue their dreams of becoming successful actors, musicians, dancers, artists etc. Investing your spare funds in stocks can help you generate a steady earning on stock dividends while you focus on chasing your dreams!
2. Access to Much Needed Capital
As millennials grow to become the juggernauts and important contributors to the Indian economy, access to credit and financing has been major obstacles. The hassles and cumbersome paperwork and hefty collateral requirements often mean that young investors are unable to access funding to get their business ideas of the ground. The high interest rates on bank loans often proves too much of a burden for SME’s Entrepreneurs in new markets.
By helping them get cheap funds in exchange for equity, the stock market provides young entrepreneurs a lifeline. In Q4 2020, reports showed that there was a 100% jump in number of successful Initial Public Offerings (IPOs) in India. This trend is showing no signs for slowing down.
3. Leverage
Another major perk is that Investors in the stock market can also use their shareholdings as leverage to secure loans and mortgages. Funds accessed through the leverage can then be used to invest in other endeavors and build further wealth.
Final Words:
Whenever you decide to try your hand at stock picking, it is crucial that you do your homework. The goal is to find good value for your investment – especially if you plan to hold on the stock for the long haul. Before you pile your funds onto a company’s stock, you should perform a thorough research. Review the company’s fundamentals and ownership structure. Use technical analysis to monitor its volatility and viability.
