{"id":3921,"date":"2020-03-15T20:15:42","date_gmt":"2020-03-15T14:45:42","guid":{"rendered":"http:\/\/capitalante.com\/?p=3921"},"modified":"2020-06-14T11:16:10","modified_gmt":"2020-06-14T05:46:10","slug":"how-to-make-money-in-the-stock-market","status":"publish","type":"post","link":"https:\/\/capitalante.com\/how-to-make-money-in-the-stock-market\/","title":{"rendered":"How to make money in the stock market"},"content":{"rendered":"

Historically, the equity asset class has outperformed all other asset class i.e., debt, gold, bond, etc. in the long run. So, it is quite clear that you can invest in stocks via either direct equity by opening a Demat account or mutual fund. Both the investment strategies enable an investor to beat inflation as well as generate better returns in the long run. In this column, we will discuss how to make money in the stock market.<\/span><\/p>\n

While investing in the stock market you should consider two points, the time horizon i.e., short term or long term and the risk appetite i.e., moderate or high.<\/span><\/p>\n

Why short term and long term matters<\/strong><\/span><\/h2>\n

According to one famous investor of all time Benjamin Graham, the stock market behaves like a voting machine for a short-term where someone goes up for sometimes and later someone else goes up beating the first one behind. On the other hand, in the long run, the stock market acts like a weighing machine that has only one option left to move upwards.<\/span><\/p>\n

“In the short run, a market is a voting machine but in the long run, it is a weighing machine.” – Benjamin Graham.<\/span><\/strong><\/p><\/blockquote>\n

For a certain period, no one can predict the market and its movements. But historically stock market inches towards higher level for sure. Let\u2019s make it clear with an example. The benchmark index Nifty traded at Rs. 1000\/- in 1996, but in 2018 the Nifty is trading at Rs. 11,000\/-. In this period there have been many ups and downs in the stock market. But in the long term, you will surely be a winner.<\/span><\/p>\n

One of the major benefits, when you invest over a long-term horizon, is compounding interest. Let\u2019s make it clear with the following example. Just look at the following graph.<\/span><\/p>\n

\"How<\/a><\/p>\n

If you make a lump sum investment of Rs. 1 lakh at once and allow the money to compound at the rate of 15%, then you will get-<\/span><\/p>\n