Investing in shares offers many benefits over other asset classes like a high level of liquidity which gives you ready access to your money. There are over 6000 companies listed on the stock market in which you can buy shares, so there are plenty to choose from to match your investment needs.
Other benefits include:
A. Returns: Stocks can help you build long-term growth into your overall financial plan. Over a longer period of time, shares can produce significant capital gains through price appreciation. Some companies also issue free or bonus shares to their shareholders as another way of passing on company profits or increases in their net worth. Stocks, as an asset class, have outperformed most other type of investments over longer periods of time.
In addition, stocks pay dividend income, which has the potential to grow overtime. Shares that pay regular dividends are called income stocks. These companies have capital appreciation potential and when dividends are reinvested into additional shares, there is also the potential to compound investment returns.
B. Ownership: Stock represents an ownership or equity stake in a corporation. If you are a stockholder, you own a proportionate share in the company’s assets. That means you gain a part of the ownership of the company.
C. Tax Benefits: Investment in shares reaps great tax benefits. The dividend income generated on shares is completely tax-free. Long-term capital gains arising on equity investment is not taxed by the government. That means, if you invest in a company and keep the shares for 12 months, you don’t need to pay any tax on income you earn on selling the shares after 12 months. Short term capital gains tax on shares is also just 10%, while investment in other asset classes attracts short-term capital gains tax of 30%.
D. Control over your financial future: You can decide exactly how your money is invested, enabling you to have utmost control over your finances. You can choose to invest independently using your knowledge and expertise, share this responsibility with Motilal Oswal Securities Limited (MOSL) who can advise you on what shares to buy and sell or ask Motilal Oswal to manage portfolio for you.