Looking to earn that extra income through stock markets in 2021? Here’s how Motilal Oswal is helping new-age investors and traders grow their monthly income
The Indian stock market is seeing exponential rates of participation from retail investors today. In fact, the Central Depository Services (India) Limited (CDSL) has added more than 50 lakh new investors in 2020. Close to 12 lakh of these new investors opened their demat accounts in March and April of last year alone.
The major reason behind this increased participation is increasing penetration of data consumption and usage of the internet in the country which has allowed brokerage firms to release apps that allow investors to trade online in a convenient way.
Another reason for this rise is the wealth of information available on the internet. We often hear stories of people with day jobs trading or investing on the side, only to reach a stage where they take the leap to become successful full-time traders and investors. And while these cases are exceptions, such stories and other information have informed investors of the massive potential of the stock markets to generate a regular income – or at least an extra source of income.
Why making regular income in the stock markets can seem like an uphill climb
Successful traders and investors come from diverse backgrounds, be it salaried professionals working in finance, engineering, IT or other non-technical backgrounds, to business owners across sectors. This is because investors and traders do not need any qualifications to participate in the stock market. All that a person needs to succeed in the stock markets and generate a regular source of income is a disciplined approach to trading and the right amount of handholding by the experienced players in the market.
However, anecdotal history and data from multiple brokerage houses suggest that less than 20 percent of the traders make profits at the end of a year and an even smaller percentage of traders and investors beat the broader markets.
And with reason. On reading stories of successful retail investors and traders, it becomes evident that while their success is definitely glamorous, their wealth generation did not take place overnight. Such investors and traders dedicate enough time to diligently gain knowledge and skills about trading and investing principles, refine their research methodologies, and train themselves to root out biases and ensure they do not let their emotions cloud their investment or trading related decisions.
Why expert advice is crucial towards meaningful wealth creation
Needless to say, on the surface, while trading appears to work on the simple principle of “buy low and sell high,” these traders and investors spend years, often decades, refining their approach to generating meaningful wealth. Not all investors and traders would have the time, resources and drive to refine their own trading techniques in such a rigorous manner.
Also, while there is a vast amount of information available on the internet, barring professionals, many do not have the required skills to know how to put that information to right use. This is where expert guidance from experienced players like Motilal Oswal becomes critical for retail investors to generate regular income from the stock markets.
Since its inception in 1987, in-depth equity research and unbiased stock advice with a client-first approach have been at the core of Motilal Oswal’s business model. For more than three decades, a key area of focus for the company has been expansion and strengthening of its superior research and advisory capabilities to help their clients remain profitable in the markets.
“While trading and investing on one’s instincts has its own sense of thrill attached to it, we hardly come across any self-made traders or investors making serious money from the markets. Just like one would not fly an airplane after watching tutorial videos on Youtube and rather leave it to the qualified pilots to fly one to distant countries, it is in the best interests of the investors to seek advice and proper handholding from stock market experts while investing or trading rather than relying on their gut feelings or unsolicited tips”, advises Ajay Menon, CEO, Broking and Distribution at Motilal Oswal Securities Ltd.
Motilal Oswal’s handholding model for the new-age investors and traders rests on two strong pillars – a research team of 30+ experienced and extremely qualified analysts who closely track over 230 stocks spanning more than 20 sectors and an army of over 1,100 advisors who disseminate the research calls to their clients personally over phone calls and help the clients take the right trades at the right time.
Focusing on profits, and not brokerage, key to generating regular income from the stock markets
While the introduction of discount broking model and apps in India has made it extremely cheap to transact in the stock markets, there is no guarantee that the new-age investors would be able to profit from or protect their capital while trading on their own.
As long as a new entrant does not develop the required skills, a zen-like discipline, a back-tested trading or investment strategy and above it all — an unbiased and emotionless decision making process — he or she would be better off relying on expert advice from full service brokers like Motilal Oswal rather than venturing out into the jungles of stock markets on their own.
While it may sound tempting to save on brokerage by availing the services of discount brokers, what matters for someone looking to generate a steady, side-income from the stock markets is the potentially higher probability of generating regular profits with expert advice.
As they say in the stock markets – paying 10 pennies to earn a rupee is always more profitable than paying a penny to lose a penny!
Here are some guidelines from Motilal Oswal that can help traders make informed decisions in the stock market:
Try and avoid the herd mentality
For many traders, the decision to buy or sell a stock is mostly influenced by what people around them are doing. However you cannot earn more than the market if you follow the market – always research or seek advice before taking your investment decisions.
Never try to time the stock market
By trying to time the market, one can lose one’s hard-earned money in no time. A number of expert investors advise not to time the stock market as no one has ever done this with success. It is really not possible to accurately catch the top and the bottom prices of any stock. Instead follow a disciplined approach to investing and buy the right stocks at the right price.
Have a disciplined approach towards investment
Due to high volatility in stock markets, a number of investors have lost money even when the markets had a bullish trend. At the same time, all those investors who have put in their funds with a disciplined approach have generated outstanding returns. If you have a long-term gain in mind, follow a systematic approach for investing.
Never let your emotions influence your decisions
A number of investors lose their money in stock markets as they fail to think with a cool head before making the trade. When trading in a bull market, the lure of more money often prompts traders to make riskier investment decisions while in a bear market, the fear of losing money makes investors rush out of their investments at a throwaway price. Fear and greed are two factors that have to be controlled while trading in stock markets.
Always have realistic goals
Many investors tend to get carried away by the lofty returns made by other investors and set their expectations too high. In order to chase higher, unrealistic targets, they end up making riskier bets, which ultimately leads to losses. It is better to earn average returns on regular basis than to lose capital while trying to chase unrealistically high returns.
To know more about Motilal Oswal and their services which have helped over 16 lakh investors and traders, click here.