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The attraction of quick gains from intraday trading can be tempting for many retail investors. However, a recent set of findings from SEBI brings out a shocking reality: 71% of individual traders in the intraday equity segment suffered losses in FY23. As the frequency of trading rises, this percentage further goes up, highlighting the risks associated with short-term trading strategies.
So, what’s the alternative? Long-term disciplined investing. Here’s why patience in the market can lead to better financial outcomes.
The Pitfalls of Intraday Trading
According to SEBI’s study, the majority of retail intraday traders don’t make money. In fact, the proportion of loss-makers increases with the frequency of trading. Key findings include:
71% of retail traders suffered losses in FY23.
80% of frequent traders have ended up in the red.
76% of traders with an annual intraday turnover above Rs 1 crore incurred losses.
It has been stated that such statistics largely indicate that intraday trading is both volatile and unpredictable; thus, it makes for a very risky business to get into by most retail investors. It is absolutely clear that Intraday trading, where investors buy and sell stocks within the same day, carries significant risks. This strategy highly depends on capturing fleeting price movements, which can be highly unpredictable and volatile. Traders must constantly react to rapid market shifts, leading to frequent transactions and high transaction costs. This approach often results in substantial losses, especially for those lacking experience and the discipline required to manage the fast-paced nature of intraday trading. The emotional stress and tendency to make impulsive decisions further compound these risks, turning intraday trading into a high-stakes endeavour with the potential for considerable financial setbacks.
Benefits of Long-Term Investing
1. Compound Growth: One of the most important advantages of long-term investing is the power of compounding. By reinvesting earnings, one can create earnings on their investment and earnings on accrued earnings. It then proceeds to grow exponentially with time.
2. Less Stress and Fewer Emotional Decisions: Long-term investors are more immune to daily changes in the markets, which can be stressful and may lead to emotional and often irrational decisions. This stability makes for a more relaxed investment experience.
3. Reduced Transaction Costs: Frequent trading incurs higher transaction costs in terms of brokerage fees and taxes. Long-term investing reduces these expenses and thus enables more money to remain invested and grow.
5. Alignment of Investments with Financial Goals: Long-term investing aligns very well with other significant life goals, like retirement planning, purchasing a home, or funding a child’s education. These are long-term goals that require substantial capital, best built up through disciplined, long-term investment strategies.
How to Be Successful at Long-Term Investing
1. Diversification: Spread investments across asset classes, such as equities, bonds, and real estate, to mutual funds, thereby avoiding the risks associated with each class.
2. Regular Contributions: Invest regularly through a Systematic Investment Plan, irrespective of the market conditions. This would help to average out the cost and reduce the impact of volatility in the market.
3. Research and Due Diligence: Invest in companies with strong fundamentals and good governance that have witnessed stable performance over the years. For this, invest well in research and understanding of the market and economic conditions.
4. Stay Informed but Steadfast: Keep yourself updated about market trends and economic news, but do not give in to temptations which shall turn you into acting impulsively on short-term market movements.
5. Review and Rebalance: Periodically review your investment portfolio to make sure that your position remains
How Nivesh Supports Long-Term Investment
Nivesh is dedicated to empowering investors with the tools, resources, and support needed to succeed in long-term investment. Here’s how Nivesh can help you on your journey to financial growth:
1. Comprehensive Investment Solutions
Nivesh offers a wide range of investment options, including mutual funds, P2P, insurance products, and more. This diversity allows investors to build a well-rounded portfolio tailored to their long-term financial goals. Whether you are looking for equity funds, debt funds, or hybrid options, Nivesh provides access to top-performing funds that suit your risk appetite and investment horizon.
2. Expert Guidance and Research
Making informed investment decisions is crucial for long-term success. Nivesh provides expert guidance and in-depth research to help investors understand market trends, evaluate investment opportunities, and make sound financial choices. Our team of financial advisors is dedicated to assisting you in creating a robust investment strategy that aligns with your goals.
3. User-Friendly Platform
Nivesh’s platform is designed with user experience in mind. It offers intuitive navigation, easy access to investment information, and seamless transaction processes. Investors can track their portfolio performance, make investment decisions, and execute transactions with ease, all from a single, user-friendly interface.
4. Regular Portfolio Reviews
Long-term investment requires periodic portfolio reviews to ensure that your investments remain aligned with your financial goals and risk tolerance. Nivesh provides regular portfolio reviews and performance assessments, helping you stay on track and make necessary adjustments to your investment strategy.
5. Education and Resources
Nivesh is committed to investor education. We offer a wealth of educational resources, including articles, webinars, and videos, to help you enhance your financial literacy and make informed investment decisions. By staying informed and educated, you can navigate the investment landscape with confidence and clarity.
6. Goal-Based Planning
Nivesh helps you define and achieve your financial goals through goal-based planning. Whether you are saving for retirement, a child’s education, or a major purchase, our platform allows you to set specific goals and track your progress. This goal-oriented approach ensures that your investments are purposeful and aligned with your long-term objectives.
7. Qualified Mutual Fund Distributors (MFDs)
Nivesh collaborates with a network of qualified Mutual Fund Distributors (MFDs) who bring a wealth of expertise and knowledge to the table. These MFDs help in you select the right investment products that align with your financial goals and risk tolerance. Their professional insights ensure that your investment strategy is well-informed and tailored to your unique needs.
Conclusion
Even as intraday trading can be thrilling, statistics from Sebi clearly indicate that the retail trader is definitely not looking at an advantageous position. Long-term investing has its share of advantages. It brings in compound growth, lesser stress levels, and lower transaction costs. With a well-researched, diversified, and patient investment approach, an investor will generate substantial wealth over time and accomplish financial objectives much more certainly.
This goes to prove that investing is a marathon, not a sprint. The power of long-term investing just allows time to work in your favor.
