Ahmedabad: Sebi chairman U K Sinha on Thursday advised small investors to have faith in stock market and invest at least some portion of their savings into equities for better returns in future.
He, however, advised such investors to refrain from investing directly and urged them to use indirect tools such as mutual fund or pension schemes.
Speaking at a financial literacy awareness campaign organised here, Sinha stressed that stock market will yield good returns in long run and it will prove to be an effective tool for retirement planning or any other financial planning for those having very little income.
"People like vegetable vendors or anyone having very less income don't need to detach themselves from stock market. Those who want to plan for their old age, should indeed invest some portion of their savings into stock market. But, don't invest directly, as it requires skill and expertise," said Sinha.
"Looking at the pace at which our economy is growing, share market is definitely a good option for small investors. But, instead of directly investing in stock, you should go through mutual fund or pension schemes. Don't do it yourself," he added.
The programme was organised here by Indian School of Microfinance for Women, Ahmedabad, where over 200 women participated from middle and lower income group.
Sinha also said that that expert advise is necessary to get good returns from stock market.
"Trading in stocks is not your forte. Don't try to trade without any knowledge of it. You should always take advise of experts. Even when you invest in a mutual fund, keep a track about shares in which they are investing," he added.
He then counted various benefits of investing in stock market. According to him Sensex gave a return of around 15 percent.
"Long term return, that is of 10 to 20 years, of BSE's Sensex remained more than 15 percent. Though the return may get a hit in the short run due to fluctuations, it will definitely give good returns in the long run," Sinha added.
According to the Sebi chief even EPFO (Employees' Provident Fund Organisation) has shown faith in Indian stock market and recently decided to invest 5 percent in it.
"World over, it is a common practice that some portion of pension scheme funds are invested in stock markets, which gives more than 15 percent compounded growth. Even Foreign Institutional Investors (FIIs) invest pension funds of other countries in Indian stock market."
"But, EPFO had apprehensions and decided not to invest in share market. But, after 15 years of deliberations with us, they are now convinced that stock market is safe. Thus, recently they have taken decision to invest 5 percent of their total fund into stock market," said Sinha.