Many of us who have an interest in the Stock Market has the question that can Stock Market Make you Rich? The Simple Answer to this is Yes. Stock Market has been a successful instrument of investment for years. And still, it is the right place to invest but with the proper knowledge and right emotions.
What’s in this blog for you to understand if the Stock Market makes you rich or not
- Story to explain the Stock Market
- Real-Life Example of Stock Market
- Things to do
- Things not to do
Let me explain a story to you first
Once there was a Village in which a lot of Rats were living. One fine day a merchant visits the village to buy the monkeys at the rate of Rs.1000/- each.
All the Villagers were confused and thought the man has become mad. They were confused about how can somebody buy Rats for Rs.1000/- each. Even though they were confused, they tried to catch the Rats and sold to the merchant and got Rs.1000/- each for the Rat.
The talk of the merchant buying the Rats spread in the village, and everyone started to catch the Rats and started to sell those Rats to the merchant. But now the merchant suddenly announces to increase the price of the rat at which he will buy to Rs.2000/- for each Rat.
Again, the news of these Rats spread in the village. Now even the lazy ones started to catch the Rats and started to sell them to the merchant. But the Rats were limited, and the people in the village sold all the Rats to the merchant
The Twist of the Story
Everyone again was awaiting the next announcement of the increase of the price of the Rats; now, the merchant said that he would be going to his home for some time. He told the villagers that he would buy more Rats at the rate of Rs.4000/- each after returning from the house.
Now the real twist in the story was started by the intelligent merchant. He said to his assistant to sell the monkeys at Rs.3000/- each now as the Rats in the village were over, all the villagers thought of buying them from the assistant of the merchant for Rs.3000/- each and sell them at Rs.4000/- for the merchant. The villagers thought there is a profit of Rs.1000/-
The villagers became crazy and started to buy the Rats from the assistant of the merchant. The wealthy villagers bought vast quantities of rat, and even the poor villagers began to buy in large amounts by taking loans.
The people of the village bought all the Rats from the assistant of the merchant and waited for the merchant to return and purchase those Rats for Rs.4000/- each. But, no one came, and the villagers realized that they had bought the useless Rats for Rs.3000/- each.
This business is known as the STOCK MARKET here the intelligent people become wealthy, whereas the greedy ones and the ones with less knowledge will lose their money, it made a lot of people bankrupt. A few people filthy rich in this business—that’ how the Stock market works.
Conclusion of the Story
Now from the above story, we can conclude that people who are greedy and have less knowledge in the Stock Market will, of course, lead to huge losses, you may come across many people especially in India who believe that the stock market is not the right thing, and everyone losses their money in it. These people believe the words of the greedy and less intelligent people who lost their money in it. I feel that you might be getting your own answer for the question that can Stock Market Make you Rich?
Real-Life Example of Stock Market
Now By seeing the above trend there is an excellent chance of earning good money in the long term, and this is how the wealthy Investors in the world become rich, They don’t make money when they buy Stocks, They don’t make money when they sell Stocks, They make money when they hold them.
No person in the world has been listed in the Forbes list of billionaires by only trading in the stocks but, the top 10 list of Forbes billionaires includes 7 Rich People who became rich by only investing in Stocks, not by trading in Stocks.
Source : Forbes List of Billionaires
THINGS TO DO
1. Diversify your portfolio: – There is a saying that “Never keep all your eggs in one basket” you should strictly follow this first step in Stock Market, you should never buy only one stock with all your money, there are lots of fundamentally strong and great Stocks in the market, you should find them and do your own research and invest in them.
2. Have a Pre-defined Target: – Here, having the target is important because if you don’t know your target, it’s like having a journey without knowing your destination. So, you should always assign a target of your profits and exit there even though the price goes high. It is all about maintaining discipline in the Stock Market
3. Always have a predefined stop loss: – There is a great saying in the market that “You take care of your losses and your losses will take care of your profits”. There should be a stop-loss set according to your financial position. Risk-taking capacity, Not everyone’s risk-taking ability is the same. You should follow a strict stop loss here. Your emotions, like greed and panic, should not involve.
There will be the situation where the price touches your stop loss and reverses and rises to a new high, here you would feel that “I would have increased my stop-loss” please be away from these thoughts, this will impact your upcoming trades.
4. NEVER EVERY BUY AND SELL ON THE TIPS AND RECOMMENDATIONS:- This is the most important thing to do while investing in Stock Market, that is to never every follow tips, you should do you own research and invest in any Stock, This happens because people are not confident on their own research but
Also Read : Warren Buffet’s Rules of Investing
THINGS NOT TO DO
1. Futures and Options: – Futures and Options will make you low very soon and also rich if you are lucky; in my opinion, trading in F&O requires a lot of knowledge, and this is used for speculation that is why people get huge losses in F&O.
The beginners of the Stock Market directly dive into the Futures and Options and lose their money. People should slowly start from investing in equity and trading and then enter the F&O segment with lots of knowledge.
Also Read : The Top 2 Books Summary About Investing
2. Advisory Agents: – These people pretend themselves as the masters of Stock Market as they know the Stock Market. They offer you plans and charge you money and invest your money in value fewer scrap stocks. This will empty your funds you should beware of these type of people. They usually get your number and call you, you should simply reject them
3.Fear of Missing out: – Fear of missing out is also one of the reasons for our losses. We buy the stocks which are on their big rally in fear of missing profits on them, usually in this condition we buy them at their all-time high prices. From there, it falls, So there is never a chance missed in the stock market. The Stock market is full of opportunities, so you should take your opportunity in time, that’s it.
From all the above examples and stories, you might be able to understand what the stock market is. I would like to say that the Stock Market is a good investment option. But only if it is played safe, it is a game of time, patience, and knowledge. It is gambling for those who play it as gambling, and it is an Investment tool that made people millionaires. So, the simple answer to the question “Can Stock Market Make you Rich” is YES
In Short, it means to manage the risk by not keeping all our hard earned money in only one investment option.
He is known for becoming rich by investing in Stocks.
In Simple words people get more rich by Investing in Futures and Option only if they have complete knowledge, Although you have complete knowledge the risk is equal to you return, so Futures and Options is risky for Beginners.
Also Read : The Basics of Trading and Trading Styles