Some investors claim that the only way to turn your money into more money is by investing in stocks. This is the appeal of the stock market. The thought, though enticing, may be a bit further from reality than you would imagine. Nonetheless, you can earn money from stocks, but with knowledge and patience.
How long does it take to earn returns in the stock market?
Enthusiastic investors abound today’s investment space in India, and among millennials and youngsters, stocks are the best option. With great excitement, you may find an undergraduate student wanting to open a demat account no matter whether they are studying to become an engineer or a chef! This is not a bad thing. Youngsters learning the tricks of the trade early will benefit in the future as age is on their side.
However, if you enter the stock market with only the thought of making money quickly, you may be a tad disappointed. A lot depends on your strategies, the stock, your risk, and the movement of the markets. Your knowledge also counts. So, in answer to the question, “How long does it take to make money in stocks? Technically, you can do so in a matter of minutes, or a few years. It all depends on your approach to the stock market.
How do you approach investing?
As the name suggests, there are certain traders, called “day traders”, who make money in the stock market within a day. However, these traders employ trusted strategies that have stood the test of time and enter trading armed with years of experience. When you invest in the stock market, it may take you at least a year to make money if you pick a solid blue-chip stock. This is essentially a stock of a large-cap company that rides market volatility, then earns you good rewards. This is the behaviour of a true investor. Somewhere, in between, there exists something called “swing trading” in which particular stocks earn returns in a period of a couple of weeks to a few months.
Generally, the longer the period in which you stay invested with a good stock, the better your returns will be. This may be the case if you subscribe to an upcoming IPO and get a block of shares of a newly listed company allotted to you.
Assessing Risk
Everyone knows that when you invest in the stock market, there is always the factor of risks of your stocks doing an about turn and making losses. This is due to the volatility of the stock market influenced by many external factors. However, the longer you remain with your stock investment, the less risky it becomes. The shorter the period, the more the risk. Day trading may appeal to you as you may have heard of traders making money in half an hour. Nonetheless, you can lose a lot in the same period.
Ending Notes with the Rule of 72
Investors in the stock market often use the Rule of 72 to compute how their money will be doubled in the stock market. In simple terms, the rule states that the period in which to double your money works out to 72 divided by the interest you earn. If you earn 10% interest annually (returns on your stock), it will take roughly (72/10) 7.20 years for your money to double. However, when you begin your stock investment journey just after you open a demat account, you should act with patience when you start with stock investing. This is true if you invest in any upcoming IPO also.
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