Since the stock market was first introduced to the Indian economy, there have been persistent feelings of fear, reluctance, and ignorance about it by some individual investors. When it comes to purchasing stocks, there are some preconceived notions, such as “They are only for elite industrialists and HNIs alone.” The issue with this viewpoint is that people are unwilling to seek out the truth and make an effort to devote time to market research.
It makes sense that individuals over the age of 50 are more drawn to setting up fixed deposits with their savings in order to earn interest each year. But what is stopping the millennials? There is no way that it is due to a lack of capabilities or resources. At this time, that is unbelievable. Accessibility is a breeze thanks to lightning-fast internet connectivity and ever-evolving phones. The only things lacking are enough enthusiasm for the subject to pursue knowledge and the nerve to take risks.
The National Stock Exchange reports that out of the 138 Crore population in India, a mere 1.2 crores are actively investing in the stock market. Since the current government’s rule emerged in the country, the stock market has only become more lucrative. Unfortunately, people have continued to show reluctance, and there are strong reasons behind it.
Here are the top four factors suggesting Indian investors are reluctant to act when it comes to the stock market:
The long wait for the Right Time
Honestly, there would never be an appropriate time for anyone to finally pour some money into the market and wait for the returns to rain. Every economy has a slight decline and a significant uprising now and then.
The stock market is based on money, and when money is involved, uncertainty will always be a significant factor. Alas! The desire to wait for the perfect moment has caused half of young professionals to put off thinking about investing until their late 30s.
There is a high chance that their unwillingness would be an obstacle to buying stocks even in their 30s, and it is just a state of mind that gets the best of them. So when the market is high, they do not have enough to lose from their pocket, and when it is low, they are afraid of making a wrong decision. Either way, the hesitation makes them regret it.
Want heaps of money to Invest
Let’s assume that millennials today actively think about buying stocks. But the misconception that one needs lakhs and lakhs of bank balance disrupts everything. People want to make big profits as they start, and this idea of making easy money, in the beginning, has made things worse for most Indians. Why even think about doing it small when you have the option to make it big initially. The feeling that the market is supposed to give you back millions stops one from investing an insignificant amount.
Now, no one can conquer the world in the first battle. Every prominent stock market investor today begins by investing small. They get a good understanding of how the market operates and the best strategies to use when purchasing stocks as the returns keep growing.
Stock Market = Gambling your Hard-Earned Money
Acknowledging the older generation’s mindset with this ideology is quite fathomable. During the early 90’s, the average commercial bank deposit rate ranged between 9% and 11% p.a. Today, these return rates have halved. But it is amusing to see people in their early 20s maintain a similar perspective. In fact, a fair number of them favor investing in depreciating assets like new gadgets, cars, and other things.
Such individuals would rather keep their savings in a fixed deposit where they would earn pennies per month in interest than to think big and make small investments that would yield larger returns over time. The unwillingness to understand the market and leverage it leads to their belief in such bogus ideologies.
Pessimism and noise in the market
We are components of our thoughts, creating an aura around us. So when the ‘What If’s’ overpower the sanity, returns never knock because fear curtails them from investing. These people think similarly to those who bet on the stock market, and they would never think that investing in stocks can result in enormous wealth.
We all remember the 2008 economic downfall. The constant news and overload of stories where the lifetime savings of investors were wiped out in a matter of days ruled. These stories have left a lasting impression on investors. Fear of the past crashes makes some investors who do not comprehend stock market investing believe the financial markets can suddenly face catastrophic failure. “It happened in 2008, it will happen again”—What If’s rule their lives’ decisions. As a result, learning about spheres of wealth creation like the stock market is no longer an option.
The financial market is an excellent place to invest and create wealth. It requires prudence, knowledge and time. The key here is ‘Time’. A ‘Get rich overnight’ ideology is not the best way to begin your investment journey in the stock market. Novice investors must start small and invest periodically to understand how the economy functions and has an effect on the stock market.
Markets are cyclical in nature, so it takes some insight to know where we stand and what investments are best to make at a given time. There are many platforms available today that can help novice investors gain more knowledge. For those investors who lack time and knowledge, there are ample financial instruments that do not require a lot of expertise or know-how and can ensure your investments are safe and secure. SIPs are one such avenue that helps you ride market volatility while offering reasonable gains compared to fixed investments. Novice investors should seek guidance from a financial advisor if they are still unsure.
The years to come will be prosperous if millennials know how to start thinking about saving and investing early. There would always be plenty of reasons to reject the idea, and finding the best one that proves to be in your favor would do the trick.
And like Warren Buffet says, “The best investment you can make is in your own abilities.”
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