Is equity investment a gamble and hence risky?

Investment made into the stock market through any instrument like Mutual funds, direct stock purchases, Unit Linked Insurance Policy(ULIP) or NPS is an Equity investment.

When does Equity investment become risky?

1. You don’t understand how stock market operates.
Then it becomes a gamble. This is not a fixed income generating instrument. Stock market Returns depend on various factors like the companies you are invested in, the economy, investors’ emotions and time horizon of your investment, etc.

2. You depend on stock market for short term returns.
Stock market is a long term(at least 3 years) game. A good stock may not give you any return or even negative returns in a year. But on an average, it may have the ability to fetch an exorbitant return over the years.

3. You do not have patience.
Stock market is bound to move up and down, it is highly volatile. Equity can be a good investment, if one has the patience to sit through the tide.

4. You buy stocks on hearsay.
Not all stock advice is genuine or backed by research and analysis.

5. You do not have conviction in your investment.
Unless a thorough homework has been done before investing, it will be very difficult to hold on to investments in a volatile condition.