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2% Indians invests in stock market when having well regulated and tax friendly market – 5 reasons

Research have shown that most Indians love to invest in physical assets such as gold, land etc. Real estate is another well patronized sector.

2% Indians invest in Stock market

With Indian stock market currently over 100 years old, few number of Indians are investing in stocks. Worries have been expressed over the “near bottom scale” of Indian investors in the country’s stock market when compared with its counterpart like China and United States. China boasts of about 10 percent of population’s involvement in the stock market while United states can account for about 18percent. Indian is currently regarded as an emerging economy. It is also boasts of a population of over 1.2 billion with a huge population of millennials.

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Despite the well regulated and tax friendly market, a large number of the population are still not investing in the stock market. Recent studies have shown that, a meager fraction (2 percent) of the population is said to be involved in the stock market.

5 reasons why Indians not invest in Stock Market

Below are some reasons why the Indian Stock market have suffered low patronage:

  1. Poor knowledge and awareness: This is the most important reason why Indians do not invest in the stock market. Most of the population do not know much about the stock market. They cannot estimate how much they will get as returns of investment (ROI). They really don’t know how to start it, what it entails and how it works. Sometimes, some people even enter the stock market to try their luck. If things go against them, they leave the market. However,there are no proper platform to help the populace but this can be solved by proper education and tutoring.
  2. The risk involved: This is an unavoidable part of the stock market. This occurs irrespective of experience and expertise of the persons involved. Most of the populace fear losing their hard earned income to the stock market. They prefer to play safe rather than investing.
  3. Lack of capital: Majority of the Indian populace do not have the required capital to invest in the stock market. As of 2012, 25 percent of its population were below the country’s poverty limit. Some persons still find it difficult to feed themselves and fend for their respective families. The basic needs of life are lacking. This alone is capable of discouraging interested and potential investors from utilizing the stock market.
  4. Preference and choices: Research have shown that most Indians love to invest in physical assets such as gold, land etc. Real estate is another well patronized sector. Another research has stated the Indian prefer fixed deposits to the stock market. In addition, some people have attributed unwillingness as a reason to the low interest in the stock market.
  5. Lack of exchange securities: Some of the population might consider the previous scams in the sector, holding it has an excuse for not investing in the market. However, following the establishment of the Security Exchange Board of India (SEBI), the scam rates have reduced significantly. In spite of this, there are some few fraudsters around, trying to capitalize on people’s ignorance.
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Harish is the editor at howto Finance. Here we publish high quality trending news topics on Business, Finance, Loans and Credit-Cards etc. Our editorial includes worldwide topics.

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