History has proven that shares or stocks are the best form of investment to get good returns on your money. Other options like Bank Fixed Deposits, buying property or gold is not as good as buying shares. The trick is to invest in shares of good Companies.
The shares of good companies keep on appreciating in value every year. On top of this, they pay good dividends every year. When you need cash in an emergency, it is easy to sell some shares for the amount of money you need. This means you can sell the right quantity of shares to get the required cash.
Are Shares better than Bank FD
In fact, shares are better than putting your money in the bank FD. You must pick shares of companies that are part of a Country’s Share index. For example, from the BSE SENSEX, the 30 best shares of Companies in India. Or, you could choose from any of the 50 Companies included in the NSE NIFTY Index of India. These are all the best companies in India. The shares of these companies are going up in value all the time and they pay regular yearly dividends.
Share Market in India today is very mature. The Indian Share Market is sure to go in the coming years. You should be investing in shares of good companies during your working years. This will be a good foundation for building a fortune for yourself by the time you retire. The trick is to make sure you buy shares of good Indian Companies. This is what the rest of this site is all about. How to pick the right shares of good Indian Companies.
Investing in shares better than FD in banks
To compared Bank Fixed Deposit Vs Share buying, let us take a real-life example. Say I had Rupees one lakh to invest in 2010 January. If I had put this ₨ 1 lakh in a Bank as fixed deposit with interest, of say 10%, compounding every year. Now in late 2017, after almost 8 years, the total money I will get back will be Rs.2,35,795. This figure arrived at by multiplying the 1 lakh by 1.1 (10% +), 8 times (8 years). So I will make Rs.1,35,795 interest income on an FD of Rs. 1 lakh kept for 8 years.
Now to compare what we will make in case we had invested this Rs. 1 lakh in the company Hindustan Unilever (HUL) in 2010. The price of Hindustan Unilever HUL shares on 7 May 2010 was ₨ 234.95. Assume we bought HUL shares at this price on this date with my Rs. 1 lakh. With One lakh and a price of 234.95, we would get 425 shares. Deducting about 3% commissions, taxes, etc. we will have in our hand at least 410 shares of HUL. The market price of HUL at closing on 2017 September 17 was ₨ 1246-. The value of this 410 shares of HUL today, on 17 September 2017 will be 410×1246= ₨ 5,10,860-.
Good companies pay dividends every year
Apart from the increase in the value of the HUL shares, HUL pays regular dividends. We will make calculation with the actual dividends HUL paid during the last 7 years plus.
|Year||Shares||Dividend per Share||Income|
The total income from the 410 share in HUL for the last 7 years is ₨ 41,000-. Thus in essence our 1 lakh investment in HUL in 7 years gave us a total return of ₨ 5,10,860+41,000 =5,51,860. From the Fixed Deposit in the Bank, we got ₨ 2,35,795-. So you can see that investments in shares of good Companies are better than putting money in Bank FD.
Now you may ask what about if I had put it into a property. Yes, maybe the property appreciation will be more, ut what about all the problems of converting your property into money. You have to first find a finding a buyer. Since most property deals involve black money, you may get paid in a briefcase full of high-value currency notes. You have to live in fear and hide this money from robbers. You will be on the lookout list of income tax inspectors because you sold a property. Plus other problems like land tax, property tax and what not.
Sales of Shares takes place online and are very fast. Share sale money transfer to your bank account takes place within 24 to 48 hours.
Investments in Gold compared with the Indian share market
SENSEX, almost always gives better returns. See our page “better-to-invest-in-shares-property-or-gold”
Is share investment good
You can accumulate shares, by buying shares in small quantities. You can buy shares every month or whenever you have spare cash. Nowadays, in India, there are no physical share certificates as in the old days. Your holding of Shares is now kept in the ‘Demat’ form. How to open a Demat account is explained below. With a Demat account, the process of buying or selling shares online is very simple. The shares you buy or sell gets credited or debited from your Demat Account. The Demat linked bank account gets debited when you buy shares and credited when you sell shares. Thus the process of investing in shares in India is very simple.
How Demat account works in India
The term Demat means ‘dematerialised account’. For an Indian citizen to buy or sell shares, a ‘Demat Account’ is a must. In a Demat account, the Shares are in an electronic form and is like a Bank savings account. Instead of money, shares get credited or debited in a Demat account. You can open a Demat account in almost all branches of big banks in India and also with some leading Registered Stockbrokers.
How to buy and sell shares online using Demat account is simple and straight-forward. When you buy shares, the bank takes money from your bank account to pay for the share and at the same time, the share you bought gets credited to your Demat account. When you sell shares money gets credited and shares get debited from your Demat account. It is that simple, you can do all this by giving online instructions to your banker or share broker.
Who can invest in share market in India
Anyone who can open a Bank Account in India can buy shares in the Indian Share Market. You need to first open a Demat Account as explained above. In the olden days, stocks of Companies were bought only by the rich. But now Indian Shares can be bought and sold by any Indian Citizen who can open a Savings Bank Account in India
All pages in our website www.WhyShares.com
Below are links to all the pages on this Site and we hope you will make full use of all the great information about how to invest in Shares in India. So please Enjoy our website WhyShares.com
- Home Page of WhyShares.com
- Share Market Basics
- Why invest in Shares in India
- Invest in Shares, Property or Gold in India
- Best Gold Schemes in India to invest in
- Good Shares to buy in India
- India BSE or NSE Stock Exchange Better
- How to find Multibagger Shares in India
- How to do Share Trading in India
- Best way to invest gold in India
- Indian Mutual Funds explained
- SIP Investments in Mutual Funds in India
- News about India affecting Share value