The stock market is the barometer of a country’s economy. It holds a multitude of opportunities for young traders and investors looking to secure their financial future. With its dynamic nature and potential for significant returns, the stock market has become an attractive avenue for those willing to take calculated risks.

Wealth accumulation

Investing in the stock market at a young age allows for long-term wealth accumulation.

The power of compounding enables investments to grow exponentially over time.

By starting early, young investors have more time to weather market fluctuations and potentially benefit from the long-term upward trend of the stock market. Fundamentally good companies are always on the radar of long-term investors.

Portfolio diversification

The stock market provides access to a wide range of investment opportunities across various sectors and industries. Young investors can diversify their portfolios by investing in different stocks, exchange-traded funds (ETFs), or mutual funds.

Diversification helps spread risk and can enhance potential returns. Those who can’t devote enough time can easily participate in the growth story through investments in ETFs or Index based funds.

Investment education

Engaging in stock market investing at a young age offers valuable educational opportunities. Young investors can learn about financial markets, company analysis, and economic trends. This knowledge can provide a solid foundation for making informed investment decisions and financial planning throughout their lives.

Investors also get to learn about the business models of the investee company by studying their annual reports, and websites and attending the con calls. This helps them to build their business acumen and understand the business cycles as well.

Ownership in companies

By investing in stocks, young investors become partial owners of companies they invest in. So just by being a small shareholder also we get the opportunity to participate in the growth story of a company. So no need to have a big capital to start with.

This ownership can provide a sense of involvement and participation in the business world. As shareholders, they may also have the opportunity to vote on company matters and receive dividends, if applicable.

Entrepreneurial spirit

The stock market often sparks an entrepreneurial spirit. Young investors may be inspired by successful companies and innovative ideas, motivating them to explore entrepreneurial endeavours themselves.

Stock market investing can serve as a gateway to understanding business dynamics and nurturing entrepreneurial aspirations.

For those looking for diversification and exposure to broader market trends, ETFs and mutual funds can be suitable choices.

These investment vehicles pool funds from multiple investors to invest in a diversified portfolio of stocks, bonds, or other assets.

This diversification minimises individual stock risks and allows young investors to gain exposure to multiple sectors or asset classes without needing a large capital base.

Additionally, options trading presents an avenue for young traders to hedge their risks, leverage their market knowledge and take advantage of price movements.

Options provide the flexibility to speculate on future stock price movements or protect existing stock positions, enabling young traders to employ advanced trading strategies.

A lot of options-related tools are available which provide ready-made strategies to take exposure in markets with a defined risk involved therein. But it should be noted that it’s a leveraged product which carries high risk also.

Passive income stream

The stock market can serve as a platform for young traders and investors to build a passive income stream.

Dividend-paying stocks provide an opportunity to earn a regular income, as companies distribute a portion of their profits to shareholders.

By carefully selecting dividend-paying stocks with a history of consistent or growing dividends, young investors can build a portfolio that generates a steady stream of passive income.

Furthermore, the stock market offers the potential for capital gains through price appreciation. As the value of stocks increases over time, young investors can realise profits by selling their holdings. These gains can be reinvested or used to fund other financial goals.

Financial independence

Investing in the stock market can help young individuals work towards financial independence and achieve their long-term goals.

Whether it’s saving for a down payment on a house, funding higher education, or building a retirement nest, the potential returns from the stock market can contribute significantly to achieving these objectives in the long term.

However, it is crucial to approach the market with caution, employ sound investment strategies, and maintain a long-term perspective.

With proper research, discipline, and patience, the stock market canbe a rewarding avenue for young traders and investors to secure their financial futures and achieve their goals. Investors should carefully assess their risk tolerance as investment or trading in stock markets carries a lot of risks too. It is always better to consult a Sebi-registered adviser to clear any doubts.

The writer is MD — Trans Scan Securities Pvt Ltd, and chairman — ANMI EIRC

Home sale

I entered into an agreement at the end of 2021 for the sale of my residential property, which is about 40 years old. The buyer has paid almost 99 per cent of the agreed price as advance, in three instalments in FY 2022-23. However, the signing of the sale deed/registration is getting stalled. LTCG cannot be determined as without the signing of the sale deed, the CA/Valuer is not ready to work out the market price in 2021. In this situation, shall I be taxed in AY 2023-24 for the amount received as advance in FY 2022-23?

Adrija Ray, Bhawanipur

It seems that while the agreement of sale has been executed, the transfer of the title of the property is yet to be done. The liability of capital gains will arise when the title of the property is transferred and fulfilment of all conditions of the agreement of sale, including the remaining 1 per cent of payment from the buyer is concluded. There are various legal precedents where it has been observed by the judiciary that an agreement to sell does not confer property title. It has also been held in tax tribunals that in the absence of real income from the sale, the assessee is not exigible to capital gains tax. The question that remains is what you have done with the payment. If you have invested it and earned returns, that would be taxed.

Tax returns

I will reach 80 years on January 13, 2024. My income is from pension, insurance and fixed deposits. I have submitted IT returns every year. Do I need to file returns for 2023-24?

Jnana Priya Ghosh Dastidar, email

Section 194P of the IT Act provides conditional exemption to resident senior citizens above 75 from filing return. To qualify for exemption the individual must have income from pension and interest only. The interest income must accrue in the same bank where the individual is receiving pension. He/she must submit a declaration with the bank providing information such as total income, deductions, rebate under 87A etc.