It`s a market where securities are bought and sold. Technology has really made share market accessible and easy for an ideal investor and one can now invest and secure gains from the comforts of home. Saving in share market actually depends upon your conditions and your uses. For a beginner, saving is fruitful since initially registering losses is normal and share market is a very fluctuating market. The value of shares aren’t static and even experts or investors who have been investing for a long time at times are taken aback by sudden market swings.
So saving will build up your backup. For instance, you are a regular investor in share market with it being the only profession. You have to carefully invest and save considerable amount up to 3 months of usage so that if there is an uncertainty and loss bearing, you are properly able to handle the expenses. Emergency expenses need to be maintained and hence at such instances saving actually comes into use. Saving the money also depends upon the short, medium and the long term goals you have in mind. Briefing them down:
The three goals on which saving depends:
- Short term goals- to achieve the short term goals of the share market, one must save into bank accounts. The stock market tends to go up and down in the market and investment of less than 5 years would give you losses. for investors with the short term goals savings in the bank accounts is the best option.
- Medium term goals- for the medium term goals of investor, cash deposits are seen to be the best investment so far but it also depends upon to what risk he can afford to get return on his investments. For instance, if an investor is planning to purchase a property within 7 year, he would need his savings as deposits and need to risk that money. so the best option for him would be to keep the cash in the savings account.
However, it must also be borne in mind that saving of an investor is dangling from the thread of inflation. Inflation might reduce the value of savings and might severely affect the purchasing power of an investor. Each and every pound one saves today will be lesser in future. Inflation, which is a part of economy , is sure to bear an effect in saving over the time. Or if an investor is flexible and willing to take some higher risk on the investment, then he invest the money in the share market and aspire for returns.
- Long term goals- investment is best in order to achieve the long term goals because inflation tends to severely affect the values of cash saving in the medium and long term goals. The stock market or the share market is seen performing better in the long term goals providing fruitful returns on the investments. On other hand, an investor can lower risk by spreading his investment s over different types of investments. This is known as diversification.
So we conclude that saving in share market depends upon the goals on an investor. The savings of an investor depend upon the type of goals they have. The goals are divided amidst the short, medium and the long term goals respectively.