How the Stock Market Can Be the Best Saving Option?

In advanced economies, physical assets like gold and real estate are losing attractiveness. More households allocate their funds substantially more to financial investments than the physical form of assets, especially from a long-term perspective. It helps them to reduce the risk involved in shorter time frames.

There is a massive increase in the number of mutual fund folios. Retail inflows into the share markets are also multiplying. Demat accounts, the primary account for stock investing, have also marked a record opening. All in the line of earning higher returns.

Here are the aspects that make the stock market the best saving option.

Easy Investing Process

The stock market is known for higher returns, and now it is easy to access by retail investors also. It has adopted the online trading system based on a demat account and allows screen-based trading. A single demat account is enough to hold all your financial assets. 

 To answer 'what is demat account' - it is an online repository with the stock broker facilitating online trading services to individuals. It ensures the safety of your securities electronically and helps in faster share transfer at reduced costs than the offline trading system.

Flexibility to Invest in Smaller Amounts

Individuals can enter the stock market to start their investing journey with a small amount. A trading account allows you to trade even one share. You can consider mutual funds if you want to invest small.

Multiple Options to Choose from - Easy Diversification

Individuals looking to invest their hard-earned money should consider diversification across multiple types of investments. Stock market investing is an easy way to take advantage of diversification. 

It offers a number of options to invest your savings, including equities, mutual funds, debt funds, bonds, exchange-traded funds, commodities, currencies, and others. You can choose investments to include in your portfolio as per your risk profile and return expectations. 

Holding equities for the long-term will help you increase returns compared to other investments. You can consider mutual funds if you want to take lower risks than equities.

Liquidity

Stock investments are liquid assets as the market deals with a large number of market participants. The volume of trading transactions using trading accounts on stock exchanges is high. Investors should understand the difference between demat and trading accounts. 

While a demat account is the record of your financial assets, a trading account is a record of trading transactions. It is easy to exit your position online on stock exchanges using your trading account. Some assets like real estate are hard to liquid.

Regular Income

Companies share a portion of their profits apportioned for equity holders - called dividends. Investors consider fundamentally strong companies paying dividends to shareholders on a periodic basis as a source of regular income. You can consider these stocks for the long term and keep earning.

Safety of Investments

The Indian stock market is regulated by the Stock Exchange Board of India (SEBI). The SEBI keeps implementing policies or bringing reforms in the interest of investors, mainly protecting the rights of investors. 

Each and every transaction on stock exchanges is completed under the regulatory framework laid down by SEBI. There is the rarest case of fake securities, of risks of several fraudulent activities, unlike the physical form of securities.

Tax-benefits

You can reduce your taxable income by investing in the stock market. Income/loss from the sale of stocks is covered under the head 'Capital Gains. 

If you sell your stocks after one year of purchase, it will be a long-term capital gain and attract a long-term capital gains tax of @10%. Selling your stocks within one year of purchase attracts short-term capital gain per your applicable slab rate.

Thus, considering all these benefits, most investors get inspired to invest in stock market investments as the best saving option. Make sure you gauge your financial status and risk profile before putting your funds in the stock market.

Different Types of Trading Methods In Intraday Trading

Intraday trading is all about buying and selling stocks on a given day. The objective of day traders is to see whether their purchased stocks will rise or fall in value during the day's working hours. At the risk of incurring a loss, intraday traders hope to gain higher profits from the stock bought and sold during the time. Through the use of specific intraday trading strategies, day traders hope to add daily wins to their portfolio.

Intraday trading techniques include a wide range of strategies such as candlestick chart, candlestick patterns, momentum strategies, and more. Here are essential day trading strategies that you can employ and try if you are looking to earn profits by trading within one day. That’s why you should try a MT4 demo account from Hantec Markets first – a safe environment to practice and experiment before you commit.

Momentum trading

Through the momentum strategy, investors buy stocks when the price is rising. Some important points to consider when employing the momentum trading strategy include:

• A rare and drastic move in price, driven by a sound catalyst such as sudden earnings growth, successful launch, and full acceptance of new product or service, mergers, and acquisition news, etc.
• Stock growth of 25% to 40%
• Little-known stocks that trade quickly due to a decreased number of shares
• Trends or expert opinions on momentum trading from advanced analytical tools and communication platforms by well-reputed brokers such as Kotak Securities

To ensure that you do not incur significant losses, you must set a stop-loss order just below the decline of the first price.

Scalping strategy

The premise behind the scalping strategy is that small profits during the day add up to a substantial amount at the end of the day. A day trader employing the scalping strategy sets a buy and sell target and adheres to the planned levels. 

This is a swift strategy where you can buy and sell in a matter of seconds or minutes. Expert day traders generally employ the scalping strategy when they are confident to make instant decisions without regret.

Pullback trading strategy

Day traders using the pullback strategy look for stocks that have a demonstrated trend. They supervise this trend until they witness a price decline from the pattern. If an upward trend is observed, the downward price movement -- also known as Pullback -- becomes the entry point for the day traders to begin buying. To understand this strategy and the stock's trend, day traders use technical charts.

Breakout trading

When stock prices rise above the previous day's top resistance price, the breakout trade takes place. However, breakout trading is not as secure as viewing the chart, understanding the resistance, and making a purchase after a breakout. It is crucial to carefully observe the level of stock trading volumes or the number of shares that are being transferred. 

This is because, according to market experts, breakout trades on high volume are more inclined to be sustainable at the recently-changed higher price than the breakouts that have a little volume.

News trading

Stocks generally react to news events. For instance, missed earnings could cause stock prices to plummet; a rise in crude oil prices could affect oil and gas stocks, so on and so forth. By being alert on local and global happenings, you can capitalize on the information.

Conclusion

Intraday trading comes with a high degree of risk and could result in substantial gains or losses in a short timeframe. Although there are no sure shot guarantees that intraday trading can offer you high returns, you can make consistent profits in the long run by learning and applying some of the strategies and techniques mentioned above.

Investing Your Money - Understanding Your Options in the Current Economic Climate

If you have a nest egg that you'd like to keep safe and see grow then you might be forgiven for thinking that your only option is to put that money in a savings account and let the bank grow it for you. While this is fine for smaller amounts of money though, for real investing it is one of the worst and least profitable options available to you. When you invest money with a bank, they will invest the money for you in stocks, shares and properties but they will only give you a tiny fraction of the interest they make meaning that your money could be growing much faster if you had made those same investments yourself. In the current economic climate too, with the banks struggling more and more, those interest rates go down considerably meaning you can end up tying your cash up for years on end and getting less than 1% APR for your troubles.

The benefit of savings accounts for most of us is the simplicity they offer and the security. In theory you should just have to put away your money and then forget about it while it grows and there should be no chance of a bad investment causing you to lose that cash. Unfortunately though with the current climate that's no longer even true and there's no guarantee that a bank isn't going to go bankrupt losing you some or all of that investment. If you are going to stick to savings accounts then - even for smaller amounts of cash - you should divide your money across several banks to protect it.


Better yet though you should look into some of the other options you have for protecting your money. Here we will look at what the best options are for really growing and protecting your money

The Best Protection

If you really want to keep your money safe then an overseas account can be preferable in a number of ways. One of the best forms of overseas account for keeping your money safe is a Swiss Annuity which you pay into in a large lump sum up-front in order to get subsequent smaller payments over the years. This works well to save your money as it will be with a Swiss bank (meaning the economic crisis isn't so much of a factor) and because there won't be a pot of your money sitting somewhere. This is also a form of 'asset protection' meaning that even if you were to go absolutely bankrupt your money would be safe.

Investing Yourself

Another option is to invest your money directly yourself and there are a number of different ways you can do this. For security and peace of mind for instance you can invest in gold, precious materials, wine or paintings which will be generally impervious to fluctuations in the market and the economy. Investing in property is also relatively safe, though it requires a big upfront expense and can be a hassle if you plan to rent it out or just maintain it.

Alternatively you can invest in stocks and shares yourself or with a self-managed super fund (which basically sees you teaming up with other investors). This can yield high rewards but is very high risk - so if you're going to go that route it's wise to use a financial advisor who can talk you through the best decisions.

Author Byline:

John Lowrie resorts to blogging to share his thoughts and opinions with his readers. He works for Payday Angels and likes to keep himself updated with the latest developments in the field of personal finance management. His Twitter ID is j_lowrie.