Investing in equities is one of the most effective ways to grow your wealth. Research shows that, a long term equity investment outperforms most other types of investments. Equities may give good short-term returns, but the actual gain lies in long term investments. there is always an element of risk involved in short-term equity investments, due to volatility in stock prices.
The Indian stock market has returned close to 16% to the investors (as per the Nifty index returns for the last 15 years). This figure is considerably higher than the returns offered by other types of investments. For example, fixed deposits are considered as one of the safest types of investments. However, they usually offer returns in the range of 7% to 10%. Although, your money will remain safe in fixed deposits but it won’t grow much.
Equities, on the other hand, are linked to the market. Therefore, there is always an element of risk involved. The stock market can be volatile. An unfavourable event in the world of business and finance can bring down the prices of shares. For this reason, equity investments are considered a bit risky in the short term. However, regular monitoring and long term investments provide positive returns to the investors.
Long Term Equity Investments vs. Short Term Equity Investments
- The risk of returns involved is lesser in a long-term equity investment. You are almost certain to get good returns from equity investments in the long term. The risk of returns is higher in short-term equity investments.
- By investing in equities for long term, you can avail tax benefits. There are no tax benefits on short term equity investments.
- Investing in equities for long-term means that temporary price fluctuation won’t affect your investments. In the short run, a world event can drastically bring down the value of your share.
Long term equity investors enjoy the benefit of rupee cost averaging. This means that they have the option to buy stocks when the market is down. Short term equity investors don’t enjoy any such benefit.
Research and Ranking is one of the leading online stock market advisors in India that can help you make a profitable long-term equity investment. It provides you innovative tools that are backed by smart algorithms and advanced technologies. The guidance provided by Research and Ranking prove to be very useful in helping you avoid costly mistakes in equity markets.