When should one foray into capital markets?

By Mr. Prabhakar Tiwari, Chief Growth Officer, Angel Broking

The internet is replete with suggestions about the best time for people to begin their capital markets journey. Whether it is a first-time investor or a first-generation entrepreneur, the fact remains that the capital market has something or the other for everyone. While forward-looking entrepreneurs can develop and launch innovative products, services, and platforms, investors can leverage them to create superior wealth.

Getting a ringside view of the markets

Stock markets have several instruments to choose from, and there is understandably no single way to approach it. The same holds for entrepreneurs as the need-gaps are both wide-ranging and dynamic. However, developing the know-how and basic understanding before foraying into the segment should auger well for both investors and entrepreneurs. Be it portfolio diversification, advanced charting, mutual funds, or any other aspect, learning the fundamental concepts makes a sizable difference.

Several service providers also understand the fears and predicament of prospective investors. This has led to the proliferation of virtual trading platforms, wherein paper trading or virtual trading takes place. It helps potential investors by gaining a fundamental understanding of the markets without involving real money. Investors can then get into the more real-time dynamics of live markets. Entrepreneurs, on the other hand, can integrate such services into their offering to make UX more seamless.

Investing young and investing for families

Today’s youngsters are far more cognizant of the need to secure their futures than those of the previous generations. The proliferation of mobile apps, ongoing digital inclusion, and high disposal incomes have all led to this transformation. In a fast-paced world where changing technologies are disrupting lives and processes, millennials realize that starting young can help them build portfolios that will serve them in times of future crises. Additionally, when a new investor starts young, he/she also enjoys the flexibility of experimentation. They are likely to possess a better risk appetite than those who are in their 40s or 50s, who would rather make safe bets for their post-retirement life.

With more risk comes more reward while the speculative nature of the markets self-adjusts and balances the ecosystem over time. Nonetheless, for someone who is starting fresh, taking expert guidance to build a diversified portfolio of stocks and keeping the risk exposure low is ideal. Similarly, families today encourage their children to develop good traits, providing weekly/monthly allowances or stocks to their children.

Importance of time and other benefits of investing early

Some wish to remain safe by investing in other forms of investment like Fixed Deposits, physical gold, real estate, and other such instruments keeping the longevity of the secure options in mind. They often wait for an opportune moment to carry out market entries, as they believe that possessing a large capital will allow them to hedge better bets. While the intentions are maybe noble, the reality of the markets defies these odds.

It is better to invest incrementally, as with every investment, the chance of long-term compounding of share value and market growth work in the favor of investors of all sizes. The waiting game doesn’t often produce the results one might be looking for. This is why, the worth of investing in global indices is calculated over a significantly wide timeline, say a decade or more. It provides a complete picture as to how one’s diversified portfolio and timely investment can deliver the goods to an investor. Therefore, people must overcome constraints, start early investments, gradually build profiles, and invest in learning about the markets every year to come out as successful investors.