Why middle class Indians are scared to invest in stocks?????

I have a question to the people who are between age group 25-35 years, Have you ever tried to tell your parents that you would be investing your hard earned money into Stocks???

I bet 99% of your parents would straight away think you are crazy or you are being conned by some stock broker who will usurp your savings. In the year 2006 I faced the same issue, I saved around Rs 100000 and wanted to invest that amount.

Then I asked my Father if I should invest that amount in stock market. He told me about some scary incidents where his close friends who traded stocks lost around 20-30 Lakh Rupees.

After hearing that, I didn’t even do due diligence on stock market. I simply came to a conclusion that if you invest your money into stock market then you will simply loose your money.

In India I guess there are 3 reasons why people lost their money in Stock Market.

  1. Lot of People Traded Stocks instead of Investing into them.
  2. Most of the people traded on rumors and tips, rather than facts.
  3. Lack of education on Stock Market and its instruments.

Later in 2010 I came to US on an onsite assignment. This event has changed my perspective on the stock market. My project Manager who is an American told me in a conversation that 52% of Americans invest their savings into stock market.

Then I was surprised and then I raised my apprehensions on investing savings in stock market. Then he asked me few simple questions.

  1. Are you a trader or investor?
  2. Why do you want to trade or why do you want to Invest?
  3. Did you learn about fundamental Analysis?
  4. Did you read an Annual report of a company?
  5. Do you have any idea on reading Profit/Loss statement, Balance sheet or cash-flow statement?

I told him I don’t know or I don’t have an answer to those questions. He smiled and told me that I am a lucky guy coz without any knowledge about stock market If I tried to trade or invest I would have lost my money.

So my guess is, we got scared of stock market because we didn’t know what we are going to face. So most of my parents generation stayed away from stock markets due to this and instead invested into Fixed deposits or Life insurance or Real estate.

I guess now is the time we need to overcome the fear of investing in stock market. We can overcome the fear only through education. There are lot of free articles on google who can educate on understanding stock market, Analyzing an Annual report etc.

One good example is StockEdge app. This is an excellent source for education on stock markets and analysis of a stock. They have very good videos which can give basic information on stock markets.

Feel free to include any other free Education links on stocks in comment section.

So, These are my thoughts. What about you guys? do you feel the same way????