Yes, beginners can make money in the stock market, but mainly by investing for years in diversified funds, not by trading. SEBI’s own studies show that roughly nine in ten individual F&O traders and seven in ten intraday traders lose money, while a patient investor in a broad index has historically come out ahead over long periods.
This article sets out those odds with the data, then gives a step-by-step starter plan, realistic return and volatility expectations, the mistakes that cost beginners most, and an illustrative way to split a first ₹1 lakh.
The honest answer: investing and trading have very different odds
“Making money in the stock market” covers two very different activities. Investing means buying a share of businesses and holding for years. Trading means trying to profit from short-term price moves, often within a day or week. Our explainer on trading vs investing goes deeper; the numbers below show why the difference matters so much for a beginner.
What SEBI found about F&O traders
F&O means futures and options, contracts whose value depends on a share or index. SEBI has studied individual F&O traders several times, and the result keeps repeating:
- FY22 to FY24: 93% of individual traders made losses over the three years.
- FY25: about 91% (90.9%) of individual traders made a net loss.
- FY26: 87.7% made a net loss. Individuals lost ₹91,685 crore in aggregate, an average of about ₹1.17 lakh per trader, and options accounted for about 92% of the losses (SEBI study released August 2026, as reported by Outlook Business).
Fewer people traded in FY26 (active individual traders fell from 98.1 lakh to 78.6 lakh), but the share losing money barely improved. If you are tempted by options, read whether you can make money with options trading before risking a rupee.
What SEBI found about intraday traders
Intraday trading means buying and selling shares on the same day. SEBI’s July 2024 study of the equity cash segment found that 7 out of 10 individual intraday traders lost money in FY23. The share of loss-makers rose to 80% among those making more than 500 trades a year, and was 76% among traders under 30.
Costs made it worse. On top of their trading losses, loss-makers spent an extra 57% of those losses on brokerage, taxes and charges. Our article on making money in intraday trading explains why these costs are so hard to overcome.
What long-term investing has delivered
Compare that with simply owning the market. The Nifty 50 Total Return Index, which includes reinvested dividends, has compounded at 12.12% a year since its base date of 3 November 1995 (as of September 2026, NSE Indices). That is a past figure, not a promise, but it shows the long-run direction for patient money.
| F&O trading | Intraday trading | Long-term index investing | |
|---|---|---|---|
| Evidence | 87.7% of individuals lost money in FY26 | 7 in 10 lost money in FY23 | Nifty 50 TRI: 12.12% CAGR since 1995 |
| Time needed | Hours or days per trade | Minutes to hours | 10+ years |
| Costs | High, frequent | High, frequent | Low (index fund or ETF) |
| Main risk | Losing much of the capital quickly | Steady erosion from losses and costs | Large temporary falls along the way |
A step-by-step starter plan
- Build an emergency fund. Keep about six months of essential expenses in a savings account, sweep FD or liquid fund. This stops you from selling investments at a bad time when a bill arrives.
- Buy insurance before investing. Get health insurance for yourself and your family, and a pure term life plan if anyone depends on your income. Avoid mixing insurance with investment through endowment-style policies.
- Complete KYC and open accounts. You need a PAN linked to Aadhaar and a one-time KYC. For mutual funds, KYC is enough; buy direct plans through the fund house or a platform that offers them. For ETFs and shares you also need a demat account (where securities are held electronically) and a trading account with a SEBI-registered broker.
- Pick a first index fund or ETF. A Nifty 50 index fund or ETF owns India’s 50 largest listed companies in one product, at a low expense ratio. Compare the fund’s expense ratio and tracking error (how closely it follows the index) before choosing.
- Start a SIP. Set up a monthly SIP (systematic investment plan) for an amount you can keep paying in bad months. Consistency matters more than size; see how time multiplies money in our guide to the power of compounding.
- Set an asset allocation. Decide what share goes to equity, debt and perhaps gold, based on your goals and how much of a fall you can sit through. Our guide to asset allocation for investors walks through this.
- Review once a year. Check whether your allocation has drifted, top up or rebalance, and step up your SIP if income has risen. Avoid checking prices daily.
Realistic returns and how volatile the ride is
Long-run averages hide very uneven years. The same Nifty 50 TRI that compounded at 12.12% since 1995 returned only 6.38% a year over the five years to September 2026, −7.09% over the last one year and −12.61% in 2026 up to September. A sensible plan assumes equity returns of roughly 10–12% over 15+ years, with no guarantee, and expects several bad years along the way.
2008: the global financial crisis
The Nifty 50 hit a record intraday high of about 6,357 on 8 January 2008 and closed at 2,524 on 27 October 2008, a fall of roughly 60%. For calendar 2008 as a whole, the index lost about 52%, from 6,139 at the end of 2007 to 2,959 at the end of 2008.
2020: the Covid crash
The Nifty 50 closed at a then-record 12,362 on 14 January 2020. On 23 March 2020 it fell 12.98% in one day to close at 7,610, about 38% below the January high. The recovery was fast: the index ended December 2020 at 13,982, above its pre-Covid peak.
Beginners who stopped their SIPs or sold in March 2020 locked in losses; those who kept going bought units at the lowest prices of the decade. Expect a fall of 30% or more at least once in a long investing life.
Your first ₹1 lakh: an illustrative split
This is an illustration, not a recommendation. It assumes the emergency fund and insurance are already in place, a goal at least 10 years away, and moderate tolerance for losses. Your own split should reflect your goals and age.
| Bucket | Example product type | Share | Amount |
|---|---|---|---|
| Large-cap equity | Nifty 50 index fund or ETF | 50% | ₹50,000 |
| Next-largest companies | Nifty Next 50 index fund | 15% | ₹15,000 |
| Debt | Short-duration debt fund, or PPF | 25% | ₹25,000 |
| Gold | Gold ETF or gold fund | 10% | ₹10,000 |
| Total | 100% | ₹1,00,000 |
Equity here is ₹65,000 (65%). Rather than investing it in one go, you could spread it over six months at about ₹10,833 a month (₹65,000 ÷ 6), which reduces the regret of buying just before a fall.
Stress test: if equities fell 38%, as in early 2020, the equity part would drop from ₹65,000 to ₹40,300 (₹65,000 × 0.62), a paper loss of ₹24,700. If debt and gold held steady, the whole portfolio would be worth about ₹75,300, down 24.7%. If that figure would make you sell, lower the equity share before you start. Note that debt fund gains on units bought since 1 April 2023 are taxed at your slab rate.
Common beginner mistakes
- Starting with F&O or intraday. The SEBI data above is the clearest warning available. Low capital requirements make these products look accessible, not suitable.
- Acting on tips. Stock tips from social media, Telegram channels or “finfluencers” are often unregistered advice, and sometimes part of pump-and-dump schemes. Check whether an adviser is SEBI-registered.
- Buying cheap-looking stocks. A ₹5 share is not cheaper than a ₹2,000 share in any meaningful sense. Here is why we suggest staying away from penny stocks.
- Too many funds. Eight funds often hold the same large companies. Two or three well-chosen funds usually give enough diversification.
- Stopping SIPs in a fall. Falls are when SIPs buy the most units. Stopping turns a temporary dip into a permanent missed opportunity.
- Selling winners too early. Gains on equity held up to 12 months are taxed at 20%, against 12.5% after 12 months with ₹1.25 lakh of long-term gains exempt each year (rates unchanged by Budget 2026).
- Investing money needed soon. Money for a goal within three years generally does not belong in equity.
FAQ
How much money do I need to start investing?
Very little. Many mutual funds accept SIPs from ₹100 to ₹500 a month, and an ETF unit can cost a few hundred rupees. What matters more is investing regularly and increasing the amount as your income grows.
Can a beginner make money from intraday trading?
A minority do, but SEBI found 7 in 10 individual intraday traders lost money in FY23, and 76% of those under 30 did. Costs alone take a large bite. A beginner is far more likely to build wealth through long-term investing.
What return should a beginner expect?
Over 15 years or more, diversified equity has historically delivered low double-digit annual returns; the Nifty 50 TRI managed 12.12% a year since 1995. Over shorter periods returns can be low or negative, as the 6.38% five-year figure to September 2026 shows. Plan conservatively and do not treat any figure as guaranteed.
Should a beginner buy individual stocks or index funds?
An index fund or ETF is the simpler start: instant diversification, low cost and no need to analyse companies. If you want to learn stock picking, keep it to a small slice of your portfolio until you understand valuation and business risk.
Can I lose all my money in the stock market?
In a single company, yes, if it fails. In F&O you can lose your capital quickly. A diversified index fund falling to zero would require India’s 50 largest companies to fail together, but falls of 40–60% have happened, as in 2008.
Ramesh Iyer is the pen name of the founder and editor of StocksInfo.AI, an independent investor in Indian equities, mutual funds and ETFs since 2020. Every article is researched from primary sources such as SEBI, AMFI, NSE and the Income Tax Department, and fact-checked before publishing. About us