What is the Pros and Cons of Investing in Equities? | Technical, Finance, Investment Questions

What is the Pros and Cons of Investing in Equities?

Anushka Trivedi

3 months ago

There are 1000 of influencers and youtubers are making videos and claiming people can become millionaires by investing in Equities.


Let's explore the advantage & disadvantage for Investing in Equities:


Investing in Equities:


Advantage:


Investing is Equities can give us good return if we chose a good company stock.

It can give upto 20-30% compounding return if we invest for long term 8-10 Years in good companies.

Equities also gives yearly 5-8% Dividend. 


Disadvantage:


It's not possible to get liquidity in case of emergency. If we want to sell it urgently we might get loss.

If you have selected wrong companies for equity investment, you might lose your investment if that company goes bankrupt.

If there is a recession or Market Crash like 2008, we may lose our investment or we have to wait long term 8-10 years to get back his investment when Market became normal.




Now let's understand this situation with example.


One person who started working in IT in 2000 and he didn't buy any House and put all his savings 10 Lacs into Equities but in 2008 Market Crash, his investment became only 25-50,000. However he didn't sell his stocks.

His all 10 Lacs investment was blocked in loss in Equities and he had to wait 6-8 Years again to get back his investment when Market became normal.

Some other people who have bought their Flat in Bengaluru and also invested some money on Equities and some in FD, were in very good position as they always had some FD Money for backup for liquidity in bad times.



Conclusion: 


So we must wisely invest our money and diversify our investment between Real Estate, FD and Equities.

An ideal investor must follow the 60:20:20 rule while investing in Real Estate, FD and Equities.

Now a days there are 1000 of influencers and youtubers are making videos and claiming people can become millionaires by investing in Equities.

We shouldn't become too much emotional by seeing influencers videos about becoming millionaires by Equities. All these people are fake and they just make fake videos to earn money by videos.

If it's so easy to become millionaires, everyone would have become millionaires now.





Anushka Trivedi

Writer at Xeloxo

3 months ago

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