Around 138 crore population in India, only 3% people invest in the stock market.
In relative to the US which has 55% of people investing in the stock market, India seems very low.
Investing is very important to our financial future. Despite most Indians don’t invest in the stock market.
Here are the 6 reasons why most Indians don’t invest in the stock market:
Lack of Awareness
When I asked my friend, do you invest in the stock market? “No, I don’t. What is it?” he said.
I went to the relatives and a few colleagues, and exactly asked the same question. and got the same answer.
This is not just a situation of my friend, but most Indians.
They are unaware of the stock market. They don’t know how much wealth we can build by investing in the stock market.
Sometimes they think we need lots of money, but they aren’t aware that we can start as low as Rs 500.
Lack of awareness is the main reason why most Indians don’t invest in the stock market.
Lack of financial literacy
The main reasons for financial illiteracy are personal finance didn’t teach in a school or there aren’t perfect courses of investing.
Most people want to invest. But they don’t know where to start, where to invest, etc… because of a lack of financial literacy.
This is the major reason why most Indians don’t invest in the stock market.
Some people know what is the stock market, where we can invest and can get good returns. However, they just don’t start because they don’t have proper knowledge about it.
The best way to be financial literate is to read books about personal finance and watch youtube videos about it and read blogs ( just you’re doing it now ).
Lack of patience
Why most people don’t invest despite they know the power of compounding? Mostly the answer is “It takes so much time.”
Most believe that is the place to make quick money. Whereby sometimes if they lose money in the short term they sell it and end up losing in the stock market.
If they just hold for a long, historically stock always moves upward if the holding company is good.
Lack of patience is also a key reason why most Indians don’t invest in the stock market.
Lack of money
According to yahoo, out of the country’s population of 136 crore people, nearly 4.3 percent of Indians have the financial firepower to invest in the markets.
In India, 57% of people earn less than 2.5 lakh per annum. They are trying hard to earn of day to day living expenses in that situation how can someone think about investing money.
But It is a misconception that investing in a stock market needs lots of money. However, you can start with little as Rs 500.
But no matter what, lack of money is the main reason why most Indians don’t invest in the stock market.
Prefer gold and physical assets
Historically, Indians most preferred to invest in gold and land. They prefer more physical assets because we can see them.
There are reasons to buy gold, if emergencies come in the future, most Indians use that money to recover from difficult situations.
Most Indians aren’t buying property or land because of building wealth or selling high from bought price. The motive of buying property is if the bad situation comes so we can sell it and use that money.
Most Indian people’s priority is to protect their money from losing it. Thereby they don’t invest in anything in which they can lose money.
Indians are more afraid of losing than winning. Because the pain of losing is psychologically about twice as powerful as the pleasure of gaining.
No matter what company you choose to invest risk comes along with it. There is no reward without its risk.
So these are the top 6 reasons why most Indians don’t invest in the stock market.
But as time goes these reasons also fade away.
Educating about personal finance is one way we can make people invest in the stock market.