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Maybe you are in your 20s, and this is the time you have started earning your money. Maybe you wanted to become rich while intending to achieve financial freedom and guaranteed life. To achieve these goals, a simple way you can do is to follow a long-term investment in the stock market. You can go to normal work for a lifetime or live an average life while at the same time you will be able to build your wealth too.

Many people have no trust in the share market and we are being projected to not invest in the stock market as if it is not safe. But Warren Buffet became the richest person by investing in the stock market meanwhile Rakesh Jhunjhunwala from India is known to be a Rich stock market investor, where he became rich just by investing in the share market. Therefore investing in the stock market has a lot of benefits.

Why do people invest in the stock market?

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When people need to earn quick money, gain long-term equity wealth or obtain long-term wealth through simple ways, they wish to invest. To earn money in such ways, they choose trading, individual stock investment, or mutual funds.

Trading

People who need to earn money in a short period of time or people who intend to earn only through the stock market will choose to trade. The reason why they choose trading is because of the influence and motivation of videos or social media platforms, which says of obtaining a huge amount of profit in 1 to 2 months. And then they intend in doing so to earn quick money. But the mistake they do is, they only see the profit gained by them but never notice how much capital was used, the patterns followed and the loss faced.

Just by seeing the profit gained in a less time period, they enter the stock market and will start comparing their day one with the day 2000 of those successful people. When they don’t get their desired amount in their early days, they will start having a negative feel on the share market thinking that it would only give losses. So it is not about to stop doing trading, but the advice is as a beginner don’t start trading instead learn about it as it will prevent you from losing your money and giving you a negative feel.

Individual share market

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Secondly, when you wanted to multiply your money in the share market, the way you see is individual share investment. This is the way chose by Warren Buffet and Rakesh Jhunjhunwala to make money and build wealth. If you analyze the fundamental business and if you know and compare the model, company management, and financial statements of the business well, and if you feel it is a good company and when it comes to the right price, you can use your Demat account to buy it and hold it for a long term, where your net worth will increase as the company grows and through dividends you can earn an income.    

Millionaires like Elon Musk and Jeff Bezos has their wealth in the share market in the publicly listed companies like Tesla and the inequity of Amazon. Therefore we should understand that a correct company should be chosen to invest in long-term equity to increase growth and to increase the dividend. But to make a decision to choose a company and make investments, you should be aware of the ins and outs, with the functions of the share market.

Simply you need experience but as a beginner it would be hard for you, so to take decisions of investing by analyzing everything you should gain experience to be capable. Read books, observe the market, and read news related to finance, so that you can gain knowledge on investment. So after obtaining a Demat account, deciding to invest will involve risks, therefore make sure to avoid investing in individual stock until you gain good knowledge.

Mutual funds

Thirdly you have mutual funds, where you invest indirectly in the stock market, as it is not about analyzing your shares on your own and selecting on which to invest, instead an asset company is there to invest on behalf of us with our little money. Each company will create each fund and say on which company has the investment being done and how much return they have got. By comparing them, you choose between the funds to invest. And as they have invested for you, they would charge an amount in the name of expense ratio.

The expense ratio will be high in an active mutual fund because they would choose everything carefully by taking more time to get back a better return. The Expense ratio amount would seem to be less in the short term, but if you are going to invest for the long term, this expense ratio will reduce your wealth. Therefore it is better not to invest in active mutual funds, instead move for a passive mutual fund that is beginner-friendly, that has a less expense ratio.

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To get wealth, you should have more patience and discipline investment to achieve success. When you start doing this from a young age, you’ll move forward than others. If you follow these strategies, you can build your wealth with long-term investment. So if you have recently joined in your first job or earning as a freelancer, open a Demat account and invest from the beginning. Moreover, improve your knowledge in investment and learn to pick the individual stock, so that you don’t have to pay the expense ratio, you can earn the dividend income and when there are issues in bonus split, your number of shares get compound.

After this, if you have capital and confidence you can move to trade. Try being rich with other sources of income or business. If you are a beginner follow the path of investing in index funds at first, then move to individual stock and then to trading. In each of these stages, the financial knowledge and the way of making money should be researched, so that you can become wealthy.

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