Is there any chance for a layperson to gain from stock exchange? [duplicate]
Currencies are a zero-sum game. If you make money, someone else will lose it. Because bank notes sitting in a pile don't create anything useful. But shares in companies are different, because companies actually do useful things and make money, so it's possible for all investors to make money. The best way to benefit is generally to put your money into a low-cost index fund and then forget about it for at least five years. It depends what you mean by 'gain'. Over long period of times the market increases so using a blind monkey with a dart or index fund should be sufficient to get an average returns. The key difference is that changes in currency are close to zero sum game while money in equity or bonds is actually used for something (building a company etc.). If you mean 'get above average returns' then you will likely get answers depending on person. If you think that markets are efficient then you won't beat the market consistently - over long periods the returns are likely to be no better then average - because of large number of 'smart people' trying to beat each other (and even them are likely to have below-average returns). If you don't think so then it is possible to get above average consistently - as long as you know how to beat those 'smart people'. No. As long as you are sensible, an average person can make money on the stock market. A number of my investments (in Investment trusts) over the last 10 yeas have achieved over 200%. You're not going to turn $1000 into a million but you can beat cash.  I suggest reading the intelligent investor  by Graham - he was Warren Buffet's mentor
"I strongly doubt your numbers, but lets switch the question around anyway.   Would you borrow 10k on your house to buy stocks on leverage?  That's putting your house at risk to have the chance of a gain in the stock market (and nothing in the market is sure, especially in the short term), and I would really advise against it.  The decision you're considering making resolves down to this one. Note: It is always better to make any additional checks out as ""for principal only"", unless you will be missing a future payment." "Generally investing in index-tracking funds in the long term poses relatively low risk (compared to ""short term investment"", aka speculation). No-one says differently. However, it is a higher risk than money-market/savings/bonds. The reason for that is that the return is not guaranteed and loss is not limited. Here volatility plays part, as well as general market conditions (although the volatility risk also affects bonds at some level as well). While long term trend may be upwards, short term trend may be significantly different. Take as an example year 2008 for S&P500. If, by any chance, you needed to liquidate your investment in November 2008 after investing in November 1998 - you might have ended up with 0 gain (or even loss). Had you waited just another year (or liquidated a year earlier) - the result would be significantly different. That's the volatility risk. You don't invest indefinitely, even when you invest long term. At some point you'll have to liquidate your investment. Higher volatility means that there's a higher chance of downward spike just at that point of time killing your gains, even if the general trend over the period around that point of time was upward (as it was for S&P500, for example, for the period 1998-2014, with the significant downward spikes in 2003 and 2008). If you invest in major indexes, these kinds of risks are hard to avoid (as they're all tied together). So you need to diversify between different kinds of investments (bonds vs stocks, as the books ""parrot""), and/or different markets (not only US, but also foreign)." Consult a professional CA. For shares sold outside the Indian Stock Exchanges, these will be treated as normal Long Term Capital Gains if held more than one year. The rate would be 10% without Indexation and 20% with Indexation. If the stocks are held for less than 1 years, it will be short term gains and taxed according you to tax bracket. "The price at which a stock was purchased is a sunk cost--that is, you cannot go back in time and reverse the decision you made to purchase that stock.  Another example of a sunk cost would be purchasing a non-refundable, non-transferable movie ticket.  Sunk costs have the tendency to create a cognitive bias in which we feel that the amount we paid at some point in the past should have some sort of bearing on the decision we make now--the purchaser of the ticket feels he must go see the movie even if he no longer wishes too, lest the ticket ""go to waste""... the investor hopelessly clings to a battered stock for that tiny chance that just maybe some day it will return to its former glory.  This is referred to as the ""sunk cost fallacy"" and is considered to be irrational behavior by economists. Keeping this in mind, your hopes and dreams for the stock at the time you purchased it should have no bearing on the decision you make now.  Similarly, whether the stock has risen or fallen in price since your purchase date should have no bearing.  Instead, you must consider what you expect the stock to do from this very moment on into the future--that is, you must act at the margin. You've indicated that you are faced with two choices--sell the stock now, incur the loss, but benefit from the tax break (Option A).  This benefit is quite easily quantifiable--it is your marginal tax rate multiplied by the additive inverse of the loss (assuming you have/will have other gains to offset).  Let's just assume that you incurred a $1000 loss, at a marginal tax rate of 20%, which means your tax benefit for the loss is $200. The second choice--to hold the stock in hopes of it rising in price (Option B)--is a bit harder to quantify.  You must assume that today is day zero, and that every cent in price the stock rises is a gain to you, and every cent in price the stock looses is a loss to you.  If you believe that the stock will rise to a price that will net your more than your tax benefit from option A, then holding the stock is more favorable than selling it at a loss today.  Conversely, if you believe this stock will fall even further in the future, or not rise enough to net you $200 (per the example), then Option A is preferable. Granted, there are some additional complications that play into your decision.  By selling the stock today, you not only get a tax benefit from the loss, but you've also freed up the funds previously used to purchase that stock to be invested elsewhere (in hopefully a better performing asset).  If you choose to stick with your current stock, then the gains you may have netted elsewhere must be considered as an opportunity cost associated with Option B.  Finally, the tax benefit is essentially guaranteed (so in our example, a $200 risk free return), while sticking with the stock in Option B still comes with some risk." The idea of a stockmarket is multiple people betting on the value of an asset and then getting paid the difference between their bet and the real value of the asset.  The goal being to keep the value of the stock as accurate as possible so capital is allocated to companies that will use it most efficiently.  The reward for people making these bets is a portion of that capital.    What you are suggesting is just a graph of the average happiness.  The difficult part of turning this into a market, is being able to assign value to happiness, value that you can gain or lose by choice.      Ironically, money is a indicator of happiness.  When apple came out with the iPhone, people saw it and decided it would make them happier if they owned it creating demand.  Investors noticed that people believed owning an iphone would make them happier so they bid up the price of AAPL stock.  People are happier with their iPhones and investors benefitted from this happiness and got cash allowing them to spend money on things to increase their happiness.    In order to extract happiness from the stock market a lot of other things come into play.  A biotech company curing cancer would be a solution to something that drastically decreases happiness.  Increasing alcohol sales might be a result of people trying to offset the sadness in the short term but in the long term it is a depressant and doesn't make you happy.  An individual might be happier with an extra $10B but overall 1 million people getting $10k each would increase average happiness much more.  But somebody like buffet can invest in companies that can generate way more happiness than just handing out cash.    The happiness report is an annual report of happiness.  Looking at these results next to the Gini coefficient (income inequality), and industry growth by country might start to give you an idea of what affects happiness.  For instance in Africa income inequality could sky rocket while the stock market plummets and happiness could still increase because of public health investments made years ago, causing the infant mortality rate to plummet.  If you want to think about this topic I recommend reading the great escape by Angus Deaton. "I tried to read a couple of articles, most are behind a paywall.  Hopefully you'll forgive me for thinking the whole page looked like a bunch of corporate propaganda- an entire page of ""here's why everyone is wrong about us"" with formatting from the early 2010s.   Maybe you can walk me through this.   You've got thousands of mathematicians and engineers who could be designing something useful instead spending time accomplishing nothing except for fractionally beating each other at trading ""paper"" assets.   Similarly you have construction crews that could be expanding internet capability, instead laying cable some guys can signal trades sooner than other guys.  The positions HFTs hold are so short, they can't possibly be benefiting from the actual overall change  in value of the underlying assets, which happens over the course of months, not microseconds.  So the only possible returns come from ""taking"" someone else's value.   I'm not making a moral judgement, here I'm pointing out that there's no net benefits to society." I think I have a better answer for this since I have been an investor in the stock markets since a decade and most of my money is either made through investing or trading the financial markets. Yes you can start investing with as low as 50 GBP or even less. If you are talking about stocks there is no restriction on the amount of shares you can purchase the price of which can be as low as a penny. I stared investing in stocks when I was 18. With the money saved from my pocket money which was not much. But I made investments on a regular period no matter how less I could but I would make regular investments on a long term. Remember one thing, never trade stock markets always invest in it on a long term. The stock markets will give you the best return on a long term as shown on the graph below and will also save you money on commission the broker charge on every transaction. The brokers to make money for themselves will ask you to trade stocks on short term but stock market were always made to invest on a long term as Warren Buffet rightly says. And if you want to trade try commodities or forex. Forex brokers will offer you accounts with as low as 25 USD with no commissions. The commission here are all inclusive in spreads.  Is this true? Can the average Joe become involved? Yes anyone who wants has an interest in the financial markets can get involved. Knowledge is the key not money. Is it worth investing £50 here and there? Or is that a laughable idea? 50 GBP is a lot. I started with a few Indian Rupees. If people laugh let them laugh. Only morons who don't understand the true concept of financial markets laugh. There are fees/rules involved, is it worth the effort if you just want to see? The problem with today's generation of people is that they fear a lot. Unless you crawl you dont walk. Unless you try something you dont learn. The only difference between a successful person and a not successful person is his ability to try, fail/fall, get back on feet, again try untill he succeeds. I know its not instant money, but I'd like to get a few shares here and there, to follow the news and see how companies do. I hear that BRIC (brasil, russia, india and china) is a good share to invest in Brazil India the good thing is share prices are relatively low even the commissions. Mostly ROI (return on investment) on a long term would almost be the same. Can anyone share their experiences? (maybe best for community wiki?) Always up for sharing. Please ask questions no matter how stupid they are. I love people who ask for when I started I asked and people were generous enough to answer and so would I be. There is a difference between trading which is short term focussed and investing which is longterm focussed. On the long term what drives stock prices is still the overall economy and the performance of the underlying business aspects. I do not think that any trading algorithms will change this. These are more concerned with short term profits regardless of the underlying business economics. Therefore I think that longterm investing using index funds is still a viable strategy for most private investors.