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Recovery is being seen in the stock market and last week the market has seen a sharp rise. This has given relief to the investors. However, amidst all this, the government has its own tension. Seeing the sharp decline in the market in the past months, the government is worried that people are not taking more risk in the greed of higher returns. In fact, with the increasing participation of retail investors in the stock market compared to traditional savings, the government is afraid that common people are not taking more risk than their capacity by investing money in the stock market.
The Department of Financial Services, in a written reply in Parliament, said that such thoughtless investment in the stock market can cause huge losses to the common people. The department was responding to the trend according to which Indian families are increasing money in investment options related to the equity market as compared to traditional investment options like bank deposits.
In response, the department said that the stock market can fall suddenly, and if people do not understand the risk properly, then their money can be lost. A big reason behind this is that many people do not have financial information and understanding related to such investments. According to the government's assessment, investment instruments like stock market and mutual funds give good returns, but there is a lot of risk in them. Sometimes the market fluctuations are so fast that investors who do not understand the market are not able to estimate this loss. If the market falls, then people's years of earnings and savings can end in a jiffy. This can put their future financial security in danger. On the other hand, its effect is also seen on banks. When people choose the stock market instead of depositing in banks, the bank has to turn to other options for funds, which increases the cost for them. Along with this, their loan giving capacity also decreases, which affects the earnings and profits of banks. In view of this, the government has clearly said that people should get complete information before investing. The Finance Ministry has appealed to the people to get financial education and invest wisely. Market-related investment instruments are quite volatile and it is very important to understand the risks associated with them.
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