Why Indians Don't Invest in Stocks?

Actual Question:

Why Indians don’t invest in stock markets - because some people have created an illusion that investing in it will either make you rich or a beggar, which is not true?

Answer

Dear Friend!

Thank you very much for broaching a very pertinent point.

Yes I agree with you.

Even though Indian economy had tripled from a US$414 billion to $1.3 trillion in a span of ten years from 2001 to 2010, and the market capitalization of the companies stocks listed on the stock exchanges has multiplied nearly eight times, the direct participation of Indians into equity markets is abysmally low at 1.4% of the population.

I also agree with you that Indians somehow have an irrational fear of the stock markets. Indians associate stock markets with gambling. Their fears are not totally unjustified though. There are many instance of lives being ruined by addiction to and reckless intraday trading/ margin trading. Of course trading in stocks, commodities and currencies not at all investing, but Indians have somehow mixed up these two. Result is how you put it, “… it will make you rich or a beggar” which is not true, though.

Even if Indians do not think that dealing with stocks is downright gambling, many believe that at least it is very risky. This too is fallacious. Warren Buffett is right when he says, “Risk comes from not knowing what you are doing”.

Further, I also believe that Indians unconsciously associate wealth and riches to sin and poverty to virtue or morality. Anyway this is my very personal opinion and I maybe totally wrong. But I think that this belief system, if it really exists at all, is changing rapidly.

Wise, intelligent, learned and long-term investments in to equities is the only and sure path for riches and wealth creation for every common citizen.

It is not true that the stock market is a dangerous place or that the rich-or-beggar fate will befall those who deal in stocks.

Thank you,

With Best Regards,

Anand