Most middle-class Indians think Stock Market is a form of legalised gambling, where you either make a lot of money quickly or end up losing everything. It’s because of this element of ‘luck’ and ‘risk’ in the stock market that makes a majority of Indians opt for other forms of investing.
Physical Assets like Gold and Real Estate, which can be materially seen and used, are the preferred investment options. Emotions, especially those of the women folk in households, play a huge role in Indians opting for investing in jewellery or buying a house of their own.
When it comes to Financial Assets, ‘Fixed Deposit’ (FD) or ‘Recurring Deposit’ (RD) is believed to be the safest way of growing money. It’s only in the last few years that Mutual Funds have gained popularity, largely due to ‘Mutual Fund Sahi Hai’ advertisements.
But even the growth in mutual fund investment is a major cause of concern, because most new investors do not understand the stock market and its cycles. Whether you invest in the equity market directly or through professionally-managed mutual funds, it’s important to get a deeper understanding of the stock market – its ups and downs and more importantly the emotions i.e greed when market is hitting new highs (makes you invest more) and fear when market begins its journey down (you sell).
To avoid this, the lens through which we look at the stock market has to change. It should not be looked at as a form of gambling, instead buying a share of a company is ownership.
For example, when you buy one share of Reliance Industries, in your own small way you own a part of their business – including the telecom company ‘Jio’ which most people are using these days. When you buy Hindustan Unilever (HUL), you partly own a business that sells Brooke Bond and Red Label tea, Lux and Dove soaps, Rin, Surf Excel, Vaseline, Pepsodent and many more brands that almost every Indian household uses everyday.
How wonderful is it to be a part-owner of such glorious businesses and take a share of their profits too. They do all the hard work for you, all you have to do is select the right businesses.
The moment you begin to look at stock market as an opportunity of owning wonderful businesses, you are in the right direction in your learning and investment journey.