Can I become a millionaire by investing in stocks?

Short Answer

Investing in stocks can make you a millionaire, provided you follow the necessary steps. These include investing regularly, picking good quality stocks, and most importantly playing the long-term game rather than trying to make a million in months or a couple of years.

Detailed Answer

Why is Investing important?

Investing not only helps you to grow your money but also makes you financially free in the future. Investing is important for every individual to retain their earned money and also grow it. If you keep your hard-earned money idle, it will lose its purchasing power due to inflation. Therefore, it is necessary to invest and diversify your investments to keep the risk low and increase your returns.

Can investing make you a millionaire?

It is possible to become a millionaire by investing in stocks, but you will have to do this consistently over a long period of time in order to achieve your desired benchmark.

Investing in stocks is the best way to beat inflation and increase your money at the best possible rate. The key to getting good returns is to invest in good companies and to do it regularly. It also requires you to stay invested for a long time. Investing is never about a get-rich-quick scheme. Instead, you can get wealthy by investing small amounts at periodic intervals, over a long period of time. Rakesh Jhunjhunwala, Warren Buffet, Radhakishan Damani, are live examples of successful stock investing.

There are some key elements that you should keep in mind while investing in stocks, they are

1. Invest in good and fundamentally strong companies

This is the most valuable lesson when it comes to stock investing. If you follow this, you are set to become a successful investor. Many cheap penny stocks look like a bargain but remember they are cheap for a reason. Have you ever seen top companies like TCS, Nestle, or Reliance trading below Rs 50 or Rs 100? The answer is definitely No. Good companies won't trade at single or double digits because buyers are willing to offer a higher price for the stocks. Penny stocks may go up 50 to 100% in a very short period of time but they eventually come down in a similar fashion. Buying good companies will ensure that your capital stays protected and you also receive regular dividends as an added bonus.

2. Diversify your portfolio and invest regularly

Diversification is important to mitigate your downside risks and also to get regular returns in the process. Diversification essentially means investing your money in different asset classes like equity (stocks), debt (bonds), cash (fixed deposits), etc.

Making regular investments is equally important to get wealthy in the future. SIPs (Systematic Investment Plans) help you to get an average cost for your assets so that you get better returns than lump-sum investing.

Conclusion

To conclude, investing small sums over a sustained period can make you a millionaire. The key is to start early and let compounding perform its job. You can invest as low as Rs 15,000 per month and get to $1 million or Rs 7.3 crores in approximately 27.5 years at a 15% annualized return. But if you bump up your initial contribution to Rs 30,000, you can achieve the same mark in just 23 years. This shows that investing is not that difficult and one can simply invest in an Index fund and beat inflation by a broad margin and enjoy the returns of good quality stocks collectively.

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Categories: Investment
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Related FAQs

How to choose stocks for long term investment in India?

There are various terms that play a huge role in determining how to choose stocks for long term investment such as P/E ratio, dividend consistency, etc. For a more elaborative information head below and read the explanation given for better understanding.

For long-term investments, which channels are viable for significant returns given the current market scenario?

For significant returns, one can look forward towards stock funds, real estate investments, dividend stocks, target-date funds and so on. Each one of these investments does offer something better to investors based on their capital of investments made.

Are CADILA, CIPLA, BIOCON the new stocks to invest in for the long term?

CADILA, BIOCON, CIPLA might be the stocks of tomorrow as they have provided significant returns owing to the pandemic and the demand for medicines and medical equipment that they produce. Furthermore, the demand will continue to surge even if the pandemic is controlled, ensuring that enough storage of medicines to prevent such a pandemic from arising is prevented.

What is difference between Long term vs Short term investment?

Short term and long term investments are the two types of investments, allowing people to invest in assets which can help them to generate a profit in the future. Both are important in there own ways and it is important to diversify also. An investor needs to be mindful about investing in both.

Is it a good time to invest in stocks? Bullish Stock Market

There are several questions that one can ask your advisor. These questions include whether its good time to enter or exit the market? Should in exit from debt and move to FD? do I continue my SIP portfolio? and other such questions.

Are healthcare stocks the new best investment for significant returns?

Healthcare stocks are quite beneficial in the given day and age, all thanks to its impact on the country. They have grown in the evaluation and even providing considerable returns that nobody would have predicted. Therefore, research the stocks that you wish to invest in in the long term and see how it pans out over 10-20 years.

How to find good companies as there are many publicly listed companies in the Indian stock market?

To find good companies out of the thousand companies listen on the Indian stock exchange, you can filter stocks on the basis of certain parameters such as Market cap, Debt to Equity, Dividend payouts, Revenue and Profits growth, etc. You can easily use an online stock screener to find out these stocks.

Is Ventura Securities safe for trading and long term investing?

Ventura Capital is a Mumbai-based Full-Service Stock Broker that was formed in 1994. It offers Free account opening and 0 AMC charges but it charges software access charge from Rs 1000 to Rs 72000 per year which is refunded in terms of brokerage.

Can NRI invest in Indian stock market?

Yes, NRIs can invest in Indian stock market. It is essential for the individual to check if he is considered as NRI or not according to the norms of the government. If yes, only then he can invest. There are also certain rules and regulations that must be followed.

Where do I find stock related information?

Fundamental analysis is an important part of stock investing. You can either refer to the company’s quarterly reports for the data or use any fundamental analysis and stock screening platform to analyse the data. Using a stock screening platform makes the job much easier as you get all the necessary data curated in one single place.