How to make money in stock market

 

Introduction 

It is common knowledge that one of the most well-liked strategies for long-term wealth creation is stock market investing. But many people, including potential investors, are unaware of how the stock market increases your money. If you're one of the many people in this circumstance, this essay will assist allay your worries. Find out how you might make money in the investment industry by reading on. 

How does money grow in the stock market? 

Wealth may be created in the  stock market in two separate ways: through dividends and through the process of capital appreciation. Here is a synopsis of these two approaches.

With the growth of capital 

When the price of the shares you have invested in rises, the amount you invest in the stock market increases, a phenomenon known as capital appreciation. To help you better understand how money you invest in the stock market might increase in value, let's look at an example. 

Assume you pay Rs. 500 per share for 1,000 shares of Reliance Industries Limited. The entire amount of money invested is five lakhs rupees. Reliance Industries Limited's share price increases to Rs. 2,800 per share approximately ten years after your initial investment. The rise in the share price causes your total invested capital to climb to Rs. 28 lakhs

Capital appreciation is the term used to describe this phenomena. You have grown your investment from Rs. 5 Lakhs to Rs. 28 Lakhs by just staying in the stock market for ten years, earning a profit of Rs. 23 Lakhs (Rs. 28 Lakhs - Rs. 5 Lakhs).

 

With dividends 

Although capital appreciation is one of the main ways to increase the value of your investments through the stock market, it's not the only method. As long as you invest in firms that regularly issue dividends, the stock market actually offers you returns on your investment in the form of dividends.

Here's an illustration of how dividend growth from the stock market can help you increase your wealth. We'll use the same example of Reliance Industries from the previous point to help us grasp this better.

 

You own 1,000 shares of Reliance Industries Limited, as you are already aware. As a stakeholder in the company, you are eligible to receive dividends as it is among the many that regularly pays them out. Assume that the company pays out a dividend of roughly Rs. 3 per share each year. In other words, you would receive Rs. 3,000 (1,000 shares * Rs. 3 a share) annually. If you were to extrapolate this over a ten-year period, the dividend amount would have been Rs. 30,000.

Conclusion 

As you can see, investing in the market is a terrific method to build money in the long run. In addition to the potential for wealth appreciation, investing in the appropriate companies can also result in periodic dividend payments. 

It is a must to have a demat account if you want to invest in stocks. In a matter of minutes, you can open a free demat account by visiting the Motilal Oswal website.