Investing in stock markets may seem like an arduous task in the beginning. The majority is because of our unfamiliarity with the stock markets and the risk of losing our hard-earned money during unforeseen market crashes. Let us go through the nitty-gritty of investing in stock markets.

What Are Stocks?

Investing in stock markets may seem like an arduous task in the beginning. The majority is because of our unfamiliarity with the stock markets and the risk of losing our hard-earned money during unforeseen market crashes. Let us go through the nitty-gritty of investing in stock markets.

Stocks are also known as equities, essentially meaning getting fractional ownership of a publicly listed corporation. These stocks are listed on stock exchanges, for example, NYSE, NASDAQ INDEX, LSE, etc. When you purchase a stock of a company, you are a part-owner of the company. With the ownership, you share the profits of the company in the form of dividends. In the longer term, if the company performs well, you also benefit from capital appreciation.

Why Invest Money in Stocks?

1. Investing Returns – The direct benefit of investing in stock markets is the stock market gains. Meaning, the value of the stock invested today will always be higher in the long term. Historical records strongly suggest that the stock markets have always passed the test of time. Moreover, the rewards on investments with stock markets are always higher than any other investment instruments. Despite the daily fluctuations of stocks or the market crashes, investments in the stock markets always give out the best returns.
   
2. Guard against Inflation – The primary purpose of investing is to secure our future. However, it is important to keep a tab on inflation from time to time. Suppose the inflation rate is similar to the rate of return, then the gains will become nil. Historically, the returns on stock investing have outperformed inflation rates. Hence, investing in stocks is a great move to stay ahead of inflation.
   
3. Ease of Conversion – Stocks are considered liquid assets since they can be easily converted to cash and have a large number of purchasers at any given time. The same cannot be said for all assets; some, such as real estate, are difficult to sell. It could take months to see a return on your home investment. It is, however, much simpler in the case of stocks. If the average volume of transactions is high then we can say that there are multiple buyers and sellers for that specific stock. This liquidity of a stock market is one of the key benefits for the investors as the process never stops.
   
4. Transparency and Trust – The stock market in every country is regulated by a regulatory body, for example in the United States, the body is the U.S. Securities and Exchange Commission (SEC). The market functions by the guidelines of it and the bodies regulate stock exchange, transparency in the market, and protect the rights of investors. This means that when an investor invests in the stock market, not only his money but also his rights are protected by these regulatory bodies. This saves them from any kind of fraudulent activity done by the company they have invested in. This makes the investments even secure and gives the investors the confidence and trust of no mishappenings.
   

How to Invest Money in Stocks?

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To be able to invest money in the stock market, you would need a brokerage account. A brokerage account helps you gain access to buying and selling securities in the stock market.

Post brokerage account creation, you will need to transfer money into your brokerage account. At this stage, you need to consider important aspects such as your investment goals, risk tolerance, etc. If you need help assessing your risk profile and investing accordingly, Tenjin AI is a good place to start. Tenjin AI assesses your investment goals and matches the same with your risk tolerance and multiple other factors to build your investment portfolio.

How to Begin Investing in Stocks?

If you are new to stock investing, we recommend connecting with a professional.

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Frequently Asked Questions

What is the minimum amount required to invest in stock markets?

There is no minimum amount required to invest in stocks. You can also buy fractional shares starting with $100. 

How many stocks should I buy in my portfolio?

The portfolio should not be over diversified as over-diversification does not yield good results and it becomes difficult to keep an eye on all the stocks. Similarly, the portfolio should not also be concentrated in one or two stocks/ industries as a tremendous fall in the price of one stock will adversely affect the overall portfolio performance.