How to invest in stocks? 87% of Indians don’t know

The whole narrative of stock markets in India is a bit skewed. While only a handful of investors choose stocks to build long-term wealth, many are compelled to stay away.

Roughly 87% of Indians don't invest in stocks and MFs at all. The crazy part is that 25% of these people can take on some risk but still avoid it. This shows a widespread distrust in stocks, often leading people to rely on alternatives like Fixed Deposits (FDs), endowment plans, or simply letting their money sit idle in savings accounts.

Why? The reason is simple: fear. There's a huge fear of making mistakes, losing money, and not knowing where to start. But the truth is that avoiding the stock market may be doing you more harm than good. So, if you've been holding back from investing in stocks because of fear or confusion, it's time to find a solution.

What You're Missing by Not Investing in Stocks

You may think that choosing an FD, an endowment plan, or just keeping your money idle in a bank's savings account is "safer" than stock market investing. But in reality, these "safe" alternatives could cost you money.

That's because endowment plans & FDs (traditional investments) offer returns of only 4-6% per year.

Now, imagine you invest ₹5 lakh for 10 years in one of these plans. After 10 years, your ₹5 lakh would have grown to ₹7.6 lakh. That's not bad, right? But if you consider inflation, which eats into your returns every year, the real value of the investment will be as low as ₹4.1 lakh. To sum up, your investment of 5 lakh would have lost ₹90,000 due to inflation.

On the other hand, if you had invested your ₹5 lakh in stocks (equities) for the same 10 years, you could have turned it into ₹18.5 lakh. And after factoring in inflation, you would have gained 10 lakh.

This shows that stocks have the potential to build real wealth, especially over long periods. The problem, though, is that most people don't hold stocks long enough to see these kinds of results.

Why Most Indians Don't Invest in Stocks for the Long Term

97% of investors hold onto their stocks for less than 5 years. This short-term approach makes it almost impossible to beat the market. And here's another big problem: 68% of investors panic and sell their stocks when the market drops.

If stocks are such a good option for growing wealth, why do so many Indians still avoid them, especially from a long-haul mindset?

1. They Can’t Pick Good Stocks

One of the biggest reasons people avoid the stock market is because they don't know how to pick good stocks. With over 5,000 companies listed on the Indian stock exchanges, it can feel like an overwhelming task to choose the right one. You might ask yourself, “How do I pick the best stock out of so many?”

It's understandable. There's so much information out there, and it's easy to get lost in all of it. This overload makes it difficult for many people to make a decision and invest confidently.

On top of that, people often don't know how to filter useful information from the noise. Some blindly trust news articles, expert opinions, or social media tips. But here’s the thing— not all stocks are good!

Findings by Finology Research Desk suggest:

• More than 80% of large-cap stocks aren’t good investments.
• Only 16% of stocks consistently outperform Nifty and give 18% higher Return On Equity (ROE) than volatile ones.

Thus, there’s a pressing need to seek help from registered and trusted stock research houses. A subscription to a good research firm can be rewarding in the long run.

Finology, a registered stock research firm, has helped over 5 Lakh Indians invest in good stocks. It has recently launched Finology 30, its flagship basket of 30 long term stocks picked and tracked by analysts in its research desk throughout the year.

Having professional analysts picking and tracking stocks for you can be really helpful, especially for those engaged in other professions.

2. They Don't Have Time to Track Stocks

Even if you manage to pick a stock and invest, you may not have the time or energy to track your stocks and pick new stocks regularly. It's easy to forget about your investments, especially if the stock market is volatile. Without regular monitoring, you might miss important updates or changes in the market that could affect your portfolio.

India has 1,312 Investment Advisors, 855 Research Analysts and 401 Portfolio Managers as of FY23. That’s just about 2,568 professionals who can research stocks day in and day out. However, crores of Indians want to invest in stocks but lack time as they’re engaged in other professions.

For most other people, their busy schedules leave little time to track the performance of their investments. The problem with this is that by not checking in, you might miss opportunities to sell or buy stocks at the right time. If you hold onto a stock that’s actually a falling knife, you could end up losing money or missing out on gains.

3. They Want to Make Easy Money

It's human nature to want to make money quickly. And this makes the stock market seem like a gold mine. However, even though stocks can be a great way to make money, it is not in the way people often think. The desire to get rich quickly leads many to follow social media tips or listen to stock "gurus" who promise easy profits. And guess what? 1 in every 4 Indians actually trusts social media for stock recommendations! This can be a dangerous game.

Many people fall prey to scams or manipulations, hoping to make fast money. They might buy into "hot" stocks at the wrong time and lose a lot of money. What's worse, they might panic and sell their stocks during market downturns, which leads to even greater losses. This behaviour is called panic selling, and it's one of the biggest mistakes investors make.

At the end of the day, the big money isn't about making quick bucks; it's about investing for the long term. So, if you're constantly looking for the next "get-rich-quick thing", you'll most likely end up losing money in the long run.

The Solution

Don’t you think you've been avoiding stocks because of the reasons mentioned above: fear, confusion, or lack of time?

But now it's time to change your tune. You can invest in the stock market and create wealth, too. How? The solution is easy and simpler than you think.

You don’t need expertise or time to invest in stocks. Start confidently with a curated list of stocks designed for long-term growth. That's where Finology 30 comes in.

Finology 30 is a list of 30 stocks picked by experts at Finology Research Desk after multi-level screening. These stocks are carefully selected to help you grow your wealth over the long term. Here's what you get with it:

• 1 stock every 12 days: Instead of guessing which stock to pick, you get a new recommendation every 12 days, making it easy to build a diverse portfolio.
• Maximum buying price: You'll know exactly when to buy each stock and get detailed reports that explain why the stock is a good choice.
• Regular updates: Analysts keep track of these stocks for you, and you'll receive important updates to make sure you stay informed.
• Risk-averse strategy: These stocks are chosen with a long-term, risk-averse approach in mind. So, you don't have to worry about making impulsive decisions or selling at the wrong time.

With Finology 30, you get 30 good stocks that are picked for growing your wealth over time. You can invest with confidence, knowing that your stocks are being tracked by analysts who love the craft.

The Bottom Line

Ultimately, avoiding the stock market means missing out on one of the most effective ways to build wealth. While challenges like lack of knowledge, time constraints, and market volatility are real, they can be overcome with the right tools and guidance.

Finology 30 offers a practical, research-backed solution to help you navigate the complexities of stock investing. By simplifying stock selection, providing regular updates, and promoting a disciplined, long-term approach, it empowers you to make informed decisions and achieve your financial goals.

So, don't let fear or misinformation hold you back. Subscribe to Finology 30 and start investing today for your goals.