Often building wealth is directly associated with investing but does investing take too long to build wealth? There are many speculations about how investing can make people rich and happier, and there are different perspectives to the same. A long-term and experienced investor knows that investing is the key to build wealth, while the day traders believe building quick wealth is when investors buy and sell at the right moment. To clear the dust off the topic, both the perspectives are right and are based on the investor's mindset.
There are many programs other than investing those lure people with "Get Quick Rich" schemes, and these are mostly scams. People start doubting and stop investing in anything, including stocks, shares, securities, or other financial products.
It is no hidden that investments are risky but getting rich depends more on the Goals. If the Goals are short, for example, Investing only Rs. 200 and getting Rs. 500 as returns only after one month in the investment market. In such situations, day traders find it easy to meet their goals as they have to trade at the end of the day and money flow is quicker. Shorter Goals are easy to attain but will those make investors quick rich in the long run? That's doubtful.
Long-term investments are slow and with lesser risks knowing that the investors will get higher returns in a long-term perspective, such as five years. These are long-term goals that make investors get higher returns and attain their goals. For example, Investing Rs. 50,000 and then wait for a long-term such as five years to get returns as high as Rs. 5,00,000. Anything is possible; the amount may be less, and so is the risk. Besides, it ensures there is a good return in the end.
The right product is important along with the investment goal. If wisely invested in long-term investments such as bonds, stocks, commodities, or others, there is a good space to build wealth. It is not true with the short-term goals or financial products that are under five years. This is because most of the products start reflecting potential changes after two-four years, where the short-term goal can never help. Besides, minor profits can be seen in the first six months, but these minor profits can never help build investors sufficient money to call themselves rich or built a lot of wealth.
There are dozens of investment options to help build wealth in the long-term and short-term, but how do investments help build wealth? Here are the ways investments help build wealth -
This concept is popular among the investors in stocks, and it is one of the ways investors can build wealth. This method is so popular that non-investors also know about this concept as often mistaken as the only stock market option. A capital appreciation is when stocks are bought when the prices are low and sold when the prices are high. This is also known as capital gains, and these can increase as high as up to +1000%, but there is no assurance that even the best stocks will rise quickly and if rise at all.
Sell on High and Buy on Low is not the only way investors can make money in stocks and markets. There is another concept called dividend payouts on holdings. In mutual funds, the fund house collects money from the investors in a pool and then uses it; at the time of returns, a small portion of the return is kept with the company. The rest is distributed to the investors, and sometimes in the form of dividends. A healthy company is also an option to get dividend payouts if not the mutual funds. There does lie a risk factor, but it is comparatively low in mutual funds.
Suppose an XYZ company decides to give its investors Rs. 100 per share, then the face value of the share is Rs. 100. This is a 100% dividend, and it is to note that the dividend value grows overtime for certain companies. At the time of returns, investors get a higher value if the company grows potentially upwards. On the other hand, it is important to research the company before investing in dividends and keep a track record of activities and historical financial records for analysis.
Solid research can help investors build wealth through the years, and this is how most of the wealthiest investors have done over the years in India. On analysis of the companies such as Tata and Wipro, investors can notice the investment of Rs. 1000 in past 20-30 Years is now worth in crores. If investors can find similar companies and invest certain money as a long-term investment, say over 20 years, there is a great chance to end up with a wealthy life. There are a few problems with such long-term wealth investments, starting with the tempt to sell the stocks and not holding them. Then, impatience can make the stockholders let go of stocks when the prices are rising or going down. If the investors can hold stocks for such a long time, there is a great chance for them to build wealth over the years and get a better fortune in the later stages of life. If the companies are like Tata and Wipro, they are pure goldmines.
Investments are related to building wealth, but the time involved depends on the goals of the investors. Day traders and long-term investors can meet their goals, but to be clear, short-term trading cannot help in building huge wealth. On the other side, long-term investments are the key to building better wealth and assets.
1. Investing in Stocks and Shares makes you rich? No, Investing does not make you rich overnight; it is a long process and depends on the situation of the market.
Investing in the right stocks can make one rich, but it is always a risky game. Bad investments or market crashes can lead to heavy losses, but if it is done right with proper knowledge and up-to-date news, one can make huge profits.
It is a rare case where day traders get rich by making millions every year. This is only possible when the right investments are made, debts are not stacked, and huge money is involved.
Solid Research on the companies and their vision with results can help an investor make the right choice before investing in a company profile for a long-term investment.
Both day trading and long-term investments are great to build huge wealth, but day trading is not effective. Long-term investments are effective and are the best for making money over long years with less risk.