What’s necessity to invest in stock markets?

What is the reason beyond to prefer investment in stock markets, why not to continue in banks or mutual funds?’. Below are suspected reasons why it’s always preferable to invest in stock markets, over traditional investment options.

Compared to stock markets, growth of money in banks (with simple interest) or mutual funds (where fund company shares some profit) is very less.
Growth of money by gaining good profits is very faster and higher with stock markets.
With savings on banks we need to satisfy with just interest (of 8-10%) on fixed deposits.
Mutual funds perform at an annual rate of 25-30%. But it’s possible to gain above 100% annual returns only with stock markets. Some small cap stocks even double and even triple within one-year time elapse.

Another demerit with banks or mutual funds is lock in period, where our money locks up to completion of fixed deposit period or maturity of a close ended mutual fund. Fixed deposits and many mutual funds even not offer tax benefits. But shares can be bought and sell at any instant we desire.

Another factor is Inflation, which if once entered the orbit outperforms bank interest rates. For example, just before recession inflation rocketed to above 12%, where bank interests stayed below 10%. So in actual we are losses by 2% by saving in banks. To tolerate growing inflation (life expenses) we should invest in stock markets or gold.

There is no entry load or additional charges, for stock market investments (only minor brokerage and transaction charges) like mutual funds with hidden charges.

With stock markets we directly get the Dividend from companies, the additional profit apart from increased share price.

Trading of shares is much more easy than mutual fund units, with outcome of online trading.

We have wide range of companies from various sectors available at optimum risk, unlike in mutual funds where the fund itself offers pre-lined sectors or companies.

Wide range of data is available to analyze stock companies, where relatively less data is available about the fund.

In mutual funds, public gets no vote or right either to influence investment decisions or demand of dividends, where public have rights in stock companies.

Even mutual funds never compete with stocks in returns, they equally corrected to shares during the last recession.

Conclusion: It’s always better to invest in stock markets due to its huge benefits over mutual funds or bank savings.

22 comments:

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