After you’ve worked for a bit, all you’re going to hear from colleagues, friends, and family is that you need to get into the stock market. For a novice, this is a nervous journey filled with messages to friends and relatives pestering them tips. Your Google search fills up with the same questions - what are share market investment tips for beginners? which are the right share market investment companies for risk-free returns? etc.
If the above description also summarises your investment journey, you've stumbled onto the correct place. Here are some of the most recent and safe share market investment tips which may assist you in making sensible investments. The stock market does not wait for anyone, so let's start immediately.
Select and Dynata conducted a survey that reflected findings that stated amongst age group of 18 to 34 years, money was invested in the stock market for a thrill by about 61% of those surveyed. This was found to be the highest percentage across all the age group brackets. This was contrasted by a mere 16% of the investors in the 65-year-old plus category. Author Erin Lowry believes that when money is invested merely for a thrill in the share market, it should be money that the investor is okay with losing.
When money is invested in a fund, it is not concentrated in one financial product. It is spread across various types of securities. However, when money is invested in share market investment companies, the risk is not always diversified.
A vital question to ask yourself is: if all this money goes bust, will I have enough left to meet my needs? What would happen if this turns to zero? Will I be okay?
The most common share market investment tip is to steer clear of using your retirement savings to fund any share market investments. Money that has been saved for funding years post-retirement must be put in an account that gives tax advantages in the long term, such as the National Pension Schemes.
To be a successful investor, a sound temperament is of utmost importance. It is important to control the urges of impulsive share market investments in companies without research.
Money gets lost due to the inability to keep emotions in check, and many stock market decisions wrongfully ride on fear and greed. Greed elevates mainly when an investor is enchanted by stories of quick money made in a short time. This makes us speculate, purchase shares without researching the share market investment companies and invest large sums without gauging risks.
A word to the wise: it is more than plenty to check your stocks once every quarter. It is very important to peel your eyes off the ticker every day - this can lead to impulsive decisions in case of short-term market fluctuations.
As an investor, it is very important to remember to focus on the value of the company and not merely the stock price. You may want to avoid making any rash decisions that may not be warranted.
If you own a stock of a particular company whose price skyrockets or dips, it is important to understand what caused it. Is it because the stock has become collateral damage due to market fluctuations caused by external events? Has the business changed an underlying aspect? And most importantly, how does this all affect you in the long term?
If you do want to experiment, know that there is no minimum share market investment amount in India. You can start investing in stocks with as less as Rs 500 (or lesser). Use this to your advantage to learn the market better.
Hot stocks garner a lot of attention. However, these shares are characteristically extremely volatile. Their share prices fluctuate at a mile a minute, especially when they are the lead story of most financial papers or media outlets. Avoid them. It's good not to be on trend once in a while.
To paraphrase Warren Buffet: you should be where no one else is interested in being. What is gaining too much traction should not be purchased. You need to remember a bit of physics here. What goes up has to come down. All stocks go through a high-performance phase which is then succeeded by a non-performance phase.
Choose stocks that have been doing well over a period of time and stand long-term potential. Hot stocks can fall as quickly as they rise. Stocks that are underdogs may deliver you better results in the longer run.
As mentioned above, it is important to keep greed in check. It is elusive to always determine how the market will move, so it is necessary to set an exit price while making an investment. Once your desired stock price is obtained, it is important to close your position and book your gains.
The stock price may move against you at any point, and this may result in losses or even greed for an even higher price may be deleterious.
Also, an important tip: it is crucial to categorise your goals as short, medium and long term. If you aim to make more money in the short term, you have to take higher risks as they beget higher returns.
Additionally, it is also important to have realistic goals in mind. If you aim to triple your capital and book 20% gains every year, that may be a tad unrealistic. As an investor, it is also important to be wary of policies that promise high returns.
All investors are compelled to modify their stock's status from time to time. Investors keep wavering between buying and selling. However, making judgments in the heat of the moment might lead to investment blunders of buying high and selling low.
This is when keeping a journal comes in handy. Not only does journaling alleviate stress, but it also serves as a great way to track goals - financial and otherwise.
With a clear mind, preferably before investing in the share market, jot down the worthiness of stocks in your portfolio as well as when you would like to exit.
A couple of questions to ask yourself:
What is it that you like about the company? What do you perceive as the firm's future potential? What KPIs are most important to you, and what benchmarks will you use to assess the company's progress? Make a list of probable problems and make a note of them.
There are times when calling it quits is necessary. Develop an investment plan that explains why you would sell the stock. We're not talking about short-term stock price fluctuations but rather long-term structural changes to the share market company you are investing in. Such as: What would happen if there were changes at the executive level? What would happen if a competitor came into the picture? A paradigm shift in the functionality of the company?
Although the share market has the potential to provide investors with windfall profits, particularly over the long term, making money in the share market might be difficult for novices who may have little to no understanding of how the market operates.
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Follow the below-mentioned steps to buy stocks:
Every investor has a different risk appetite and investment goals. It is subjective to how you want to make money and your risk goals attached to it.
Putting money into an online investment account, which can subsequently be used to invest in shares of stock or stock mutual funds, is one of the greatest methods for novices to get started investing in the stock market. You may start investing for the cost of a single share with several brokerage accounts.
No, there is no minimum limit to investment in the share market of India.