Everyone desires to make a lot of money. However, only a few people can taste the piece of cake. Approximately 10 percent of the people become affluent and other 10 percent earn a good sum of money. In total, 20 percent of people control 80 percent of the wealth in the society. Remaining 80 percent of the people have only 20 percent of the money. The weaker section of the people in the society face more difficulties due to money deficit.
To lead a comfort life, one need sufficient money and it is earned through salary, income from interest, dividends, rents etc. Many people with low-income level strive to survive for their livelihood. In this scenario, the question of becoming rich doesn’t arise. However within these revenue sources only one has to save for his future. Over a period of time, these savings will become large sum and gradually an individual move up the ladder in the society.
Saving is the keyword here. The question arises on investments i.e., Where to preserve? How much chance one can take? These are the important questions. If one person saves in bank deposits, he will get nominal interest which is normally just above the inflation. Even on these small earnings, one need to pay income tax. So it is highly impossible to knock the doors of a prosperity by this method.
There are other steps to preserve the capital. Among these, the stock market is one of the best ways to conserve capital. Large part of the wealth on the planet stays in stock markets. The risk levels vary. Normally large cap stocks give safe and fewer returns. Whereas mid and small cap stocks give high returns, which are associated with risk. Without taking the risk, one can’t become rich. Warren Buffet, Rakesh Jhan Jhan Wala, and many other investors became billionaires by taking a risk in stock markets.
One should not take the blind risk but calculated risk is advisable. Select 5-10 mid and small cap stocks and invest your savings proportionately among them. Out of these 10 shares, few may decline and reasonable returns can be expected from others. Few stocks may give us amazing returns such as Rs.10 stock may rise to Rs.1000. MRF, Natco Pharma are the examples of these categories. There are numerable examples in the market which have delivered 500 percent/ 1000percent gain. If we take the stocks like Infosys, the return of percentage might be 10000 percent.
Stock selection is very important. Don’t select all the 10 stocks from one sector. Diversification is a must. One should do research on the stocks. Thanks to the internet as most of the information is freely available. One must take the help of Certified Financial Analyst.