STOCK MARKET INVESTING
Stock market investing – the stock market can help you make a lot of money,
but you need to know the basics before buying stocks.
Here are a few tips to help you in the stock market investing
1. Never jump blindly into stock markets
Many times, people buy stocks just because their acquaintances have done so.
If you invest in the stock market without any prior knowledge or interest in the field,
you could land in severe financial troubles.
2. The stock market is not a money-making machine
You can be made to believe that a stock market is a money-making machine.
However, this is a wrong notion because people can turn into paupers while investing recklessly in the stock market.
Those who have earned well in the stock market have done through proper strategies and knowledge, and without
that stock market investing can make you bankrupt even.
3. Learn basics first
Before heading into stock market investing, learn the basics about it like financial metrics and
definitions such as PE, EPS, ROE, Market Cap;
terms related to the economy like the market relationship with inflation, fiscal deficit,
GDP, crude prices, rupee values against the dollar.
4. Invest only your surplus funds
The biggest mistake new investors make to invest money that they can’t afford to lose.
The stock market is a risky venture and invests only your surplus income there so
that even if you lose the money, you won’t be financially harmed.
5. Avoid Leverage
Leverage means the use of borrowed money to fund your stock market investing.
Leverage is a good thing when the market is moving up but things can turn sour
if there is a sudden downfall in the market.
You can end up losing money and having to pay both the principal and initial investment.
6. Avoid herd mentality
There is a herd mentality that if everybody around is investing in a particular stock,
potential investors tend to do the same.
But this stock market investment strategy can backfire if you have not chosen the stock after careful analysis.
Never buy stocks if you don’t understand its business.
7. Diversify in investment
Never put all the money into one stock.
Create a well-diversified portfolio that can help you reduce the risk
and save you from loss if a particular stock doesn’t perform well.
8. Have realistic expectations
Hoping for the best from your stock market investments is not wrong,
but you could be heading for trouble if you are solely relying on the stock market.
Stock markets fluctuate daily and expecting great returns always is unfeasible.
Investing in a stock market could be fruitful or a mere mirage.
Therefore, before investing in a stock market one need to have accurate
knowledge which could be concluded from the above information.
The only recommendation for investing in market is basically to be aware of where to invest and how to invest.