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Does Stock Investing take an excessive amount of time to build Wealth

05 Jan 2023
  • The concept of accumulating wealth appears to elicit a lot of discussion as people strive to find out the best way to do so. Many shady businesses advertise "get rich quick" schemes in order to entice people into transactions they might not otherwise consider. Stock investing has long been recognised as a powerful technique for accumulating money. How closely is the concept of accumulating money, on the other hand, linked to investing?
  • A long-term value investor would say that investment is important, whereas a day trader would claim that market swings are best made in the moment, and that this is how wealth is produced. The power of compounding works in your favour when you invest for the long run. Furthermore, if you have carefully selected the correct firms to invest in that create strong returns, selling the stock and putting the money in your bank account is usually not in your best interest. When it comes to generating wealth, the goal is to keep stock available for the long term in your portfolio. The question is, how long will it take?
  • The short answer is that it depends on your objectives. However, it's important to note that meticulousness is required for successful investing. It might take years to invest well in any market, whether it's bonds, stocks, commodities, or something else. In fact, the majority of people expect to generate money right away when they begin investing. This is a flawed mindset because wealth is rarely created in the near run. The word "short term" refers to a period of less than five years.For most investors, it takes at least two to four years for the bulk of solid equities to demonstrate a prospective dividend. When it comes to investing, a six-month time frame is only ideal for tiny gains, which is not the same as accumulating money.

What are the methods for accumulating wealth through investments?

So, while there are numerous investment possibilities available in India, the manner in which these investments pay their investors differs. Here are some of the ways that various investment alternatives in India might help you earn money.

1. Profiting from capital growth

Most stock investors are familiar with this strategy of accumulating riches. The concept is to purchase low and sell high. When you invest in stocks, you can expect to make money because of capital appreciation. When the share price rises, this is referred to as capital gains. Capital appreciation profits can be as high as 1,000 percent.

2. Dividends as a source of income

Investors can profit from dividend payouts on their holdings in addition to capital appreciation. Dividends are a common way for a healthy company or mutual fund to transfer profits to its shareholders. In many circumstances, the firm will only distribute a portion of its profits, reserving the rest for objectives such as purchasing new assets, stock buybacks, and expanding the business. Dividends are paid out according to the number of shares a shareholder owns as well as the quality of those shares.

4. Long-term wealth generation

Stocks like Wipro, MRF, and Infosys are now worth multiples of crores merely 30 years later. A stock cannot be retained for such a long time by most people. Selling the stock and taking a profit is not only cumbersome, but also incredibly tempting. This is why many people question whether actual riches can be achieved unless one is willing to retain their investments for at least 20 years.

Wrapping Up - Wealth Creation

Even if you don't maintain your stocks for twenty to thirty years, if you grow your investment and focus on fundamentally sound firms, you'll likely be able to accumulate money sooner than you think. The idea is to not procrastinate any longer and to get started as soon as possible. To learn more about wealth creation and online trading, visit Motilal Oswal website now!

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