Why Investing is so important in India and where to invest?

What is Investment: Meaning, Categories & Objectives of Investment

Investments are very essential in this modern world because just earning money from your primary source of income is not enough. In today’s time, to fulfill all your dreams, you need to make the money work hard for you as well while working for it. This is the primary motive why you should start investing. Money that’s left idle in your bank account/locker is a great opportunity that’s lost. You should invest your money smartly to earn high returns out of it. Investors in India have a variety of investment options to choose from. Here are the two most popular investment options available in India.

1. Stocks
Stocks, also popularly known as company shares, are the most famous investment options in India. When you indulge in online investment by buying a company’s stock, you actually buy ownership in that company and that allows you to participate in the company’s overall growth. Stocks are usually offered by companies that are publicly listed on the stock exchanges. Stocks are considered the most ideal long-term investments for any investor. 

2. Mutual Funds
Mutual funds have been around for a few decades now but they have gained popularity as the best investment option only in the last few years. These are investment vehicles that pool the money of many investors involved and is usually invested in order to earn optimum returns. The various different types of mutual funds invest in different securities. Equity mutual funds primarily invest in stocks and other equity-related instruments, whereas debt mutual funds invest in bonds & papers. There are also various types of hybrid mutual funds that invest in both equity as well as debt. Mutual funds are very flexible investment vehicles which allows you to begin and stop investing at your own convenience. People also invest in mutual funds because these can contribute to tax-saving purposes.

In India, anyone who wants to own investment securities like stocks, bonds, mutual funds, etc must have a Demat account. But what is a Demat Account? A Demat account acts as a storehouse of information for all of the securities transactions that you make in India. When you buy and sell any ETFs, stocks, bonds, and mutual funds, the change in ownership is recorded in your Demat account.

The SEBI (Securities and Exchange Board of India) requires anyone who wants to trade securities in India to have a Demat account. Demat accounts are mandatory, and a person without a Demat account is not allowed to conduct securities trading in India. Investors should open Demat account because apart from being mandatory, it also offers useful features and other advantages along with providing you with a permanent record of all the securities trading transactions.

So, all in all, Investing in India is very important when it comes to taking charge of your own financial security. This not only allows you to grow your wealth but also helps in generating an additional flow of income. The returns generated from your investments can provide financial stability in your future and also help in meeting your financial goals.

Amanda Peterson: Amanda is an economist turned blogger who provides readers with an in-depth look at macroeconomic trends and their impact on businesses.