The National Stock Exchange of India (NSE) is one of the leading stock exchanges in the country. Established in 1992, it is now the largest stock exchange in India in terms of total trades as well as turnover. If you are looking at investing your money for long term growth, here are 5 top reasons why investing in nse makes sense:
1. Diversification
The NSE offers investors an opportunity to diversify their portfolio across different sectors of the Indian economy like banking, IT, FMCG, infrastructure, etc. Through diversification, investors can reduce company or sector-specific risks. By investing in different sectors, the overall portfolio performance is less impacted even if one or two sectors underperform. Diversification also helps in long term wealth creation as different sectors perform well in different economic cycles.
2. Tax Benefits
The Indian government provides various tax benefits to encourage retail investment in stock markets. Long term capital gains from equities held for more than one year are taxed at just 10% without indexation. Dividend income is tax free in the hands of investors. ELSS mutual funds which invest in equities also offer tax rebate under section 80C. These tax benefits make equities an attractive wealth creation option for investors.
3. Liquidity
Liquidity refers to the ability to quickly convert an asset into cash without a significant impact on the asset’s price. The paragraph explains that the National Stock Exchange of India (NSE) offers excellent liquidity to investors due to its high trading volumes. Shares worth thousands of crores of rupees are traded daily on the NSE, allowing investors to easily buy as well as sell stocks. Even for large transactions, this liquidity ensures investors can enter along with exit the market smoothly without major changes in stock prices. Furthermore, high liquidity helps reduce trading costs as well as risks for investors by enabling nimble movements in as well as out of positions.
4. Returns
Long-term returns from equities have regularly outpaced those from other asset classes, such as real estate, gold, fixed deposits, etc. Over the last 25 years, both the Sensex as well as the Nifty 50 have produced average annual returns of over 12–15%, even after taking corrections as well as inflation into account. Equities still have the potential to yield larger returns than other investments if the time horizon is five years or longer, even though past performance does not guarantee future returns.
5. Transparency
The NSE is an extremely open exchange that strictly abides by the guidelines as well as regulations set forth by SEBI. Real-time online access to crucial information such as stock prices, as well as corporate actions, along with trading volumes is possible. Companies that are listed must also make their annual as well as quarterly financial results available to the public. With this degree of openness, investors are able to make wise financial choices.
Conclusion
An effective platform for 5paisa investors to take part in the expansion of the Indian economy is provided by the National Stock Exchange of India. Because of its high liquidity, transparency, along with diversity, as well as potential for long-term returns, systematic investing can be a good way to meet financial goals as well as create wealth.
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