Here is a beginner’s guide on how to invest in stock market

By: RAVI HARI, Senior Writer

An investor often thinks whether investing his/her money in a savings scheme/FD, or investing in Stocks would give better returns. An interest rate between 5.00% and 7.5% could be expected on Fixed Deposits, NSC, PPF, and other such schemes. Although these options are safer compared with investments in Stocks, the returns are low. The returns further go down after the tax deduction. During inflation, there is no good return on the money that one invested in these schemes.

If one is looking to get higher returns - in the range of 10% to 13% - for investments, one needs to take some amount of risk, and can consider buying stocks of companies. If money is invested in companies that are stable and are doing good in the market, there is every chance to earn profit and grow your money.

What are the advantages and disadvantages of investing in Stocks:

Pros:

• There is no bar on amount that could be invested
• A person can invest any amount
• Money can be withdrawn as and when one needs
• Stocks can be bought at low prices, and can be sold when prices are high
• One gets ownership of shares in a company
• Can overcome inflation due to its high returns factor

Cons:

• Shares offer a variable return
• Returns can be expected if investment is done for a long period of time
• Less stable securities due to market fluctuations

Logically, one should start investing only little money initially. The details of the company you are investing in should be checked. Study the stocks that have a strong potential for growth, because returns on your investment in shares depend on the performance of the company.