What is stock market? What should I know about investing in stock market?

Nutan Gupta

14 Jul 2017

New Page 1

Stock market and the rules for investing in stock market

Have you ever been in need of cash and reached out to your relatives or friends for help? After the situation is under your control and when you have enough cash, you return your relatives or friends’ money. However, since they are your friends and family, they do not expect any returns. That said, if you were to return the money after a substantial duration, you would also consider the inflation and other interest charges when returning the money to your relative. Now, imagine that instead of a personal situation, you need money for business opportunity. Then, your friends and family who lend you would also expect returns. This is the underlying principal of stock market.

Let’s glance through the rules of investing in stock market:

Do your research well:  As a kid, you used to achieve success in exams by regularly doing your homework. This works even in case of stock market. Success is just a hands distance away if you invest appropriate time in research.

Don’t be a sheep: Following in someone great’s footstep is good. However, this is not true in case of stock market. It is advisable to avoid the herd mentality. Don’t be influenced by the actions your acquaintances, neighbors or relatives.

Invest in only what you understand: If you appear for an exam, you can answer the questions only that you’ve already prepared. You could prepare for questions only that you understood. This is true even for investments. You can be successful only if you invest in what you understand.

Be target-based instead of time-based: Even Warren Buffet doesn’t like to time the markets. Thus, instead of investing for specific time, invest with a specific target in mind.

Be disciplined: Discipline is the most essential ingredient for success. Without discipline, you tend to divert from your goals or miss the timelines and be relaxed about it. Discipline ensures that your investments help you reach your financial goals.

Be more practical, less emotional: Attachment issues are realistic and we all tend to face them at some point in our lives. However, it is best avoidable in case of stock market. It is advisable that you not get attached to a particular company or a sector. You need to see the trends and invest according to your research. Be practical and choose your stocks; don’t let your emotions chose your stocks.

Don’t put all your eggs in one basket: Change is the spice of life. Diversification is the spice of investments. To maximize your gains and insure your investment against market volatility and inflation, it is recommended that you diversify your investments and not put all your eggs in one basket.

Be optimistic but be realistic: Optimism is a great asset. It can take you places in life. However, when it comes to stock market, you need to have a perfect balance between being optimistic and realistic. You need to set realistic targets and not presume your stocks to be made of superman DNA.

Try and invest only the bonus: Occasionally, market volatility effects the stock market as a whole. Thus, you are bound to get your gains, albeit after longer time period. If you invested all your earnings into stock market without diversification, you could be in for a surprise. Hence, it is advisable that you only invest the extra amount that you have.

Scrutinize strictly: Investments are like babies. You need to constantly monitor their progress. If you allow them to grow unmonitored, you stand a chance to be in for a surprise. Thus, monitor your plans and be a proud investor.

To sum it up

Your investments in stock market have the potential to earn huge. However, it demands time and efforts. If you are ready to make some intelligent investments, you can rest assured that you will get guaranteed returns.

Have Referral Code?

Similar articles

  • Responses
  • Patidar Samaj

    - 2 hrs ago

    This article claims RJio was given a "Backdoor Entry" into the 4G Based Voice Routing. The peculiar aspect is without the Voice License, Rjio would have been a mere ISP. With the license, it is now a holistic communications service provider, with ability to exponentially scale the bouquet of products. The events indicate it was meticulously planned way before the auctions because the auctions were clear on the agenda: 4G for internet only.

Load More
mutual-fund

Why to Choose Mutual Funds Instead of Directly Investing Into Equities?

Whether to invest in equities or mutual funds is a question that has plagued every investor. As someone who needs the best value for his/her investment should you invest in equity directly or via mutual funds?

Let’s start by first understanding what these two terms ‘equities’ and ‘mutual funds’ stand for-

Equities- Equities generally represent ownership of a company. If you own any equity in a company, you are a part owner of the said company (depending on how much equity you own).

Mutual Funds – It is an investment scheme which is professionally managed by an asset management company. It pools together the resources of a group of people and invests their money in equities, debentures, bonds and other securities.

Why choose mutual funds over equities?

For people who’ve never invested in either stocks or mutual funds, it is hard to know which is better and where to start. Broadly speaking, if you are a novice investor, mutual funds are not only less risky but also way easier to manage. Here are some ways in which investing in mutual funds is beneficial as opposed to investing in equities -

Diversification

Mutual funds provide more diversification as compared to an individual equity stock. When you invest in equity, you are investing in a single company which has its inherent risk. For example, if you invest Rs.20,000 in buying equities of one company, you could face a total loss if that particular company performs poorly in the market.  

If you invest the same amount in mutual funds, it will be invested in different kinds of stocks and financial instruments, high-risk and low-risk both, so you might not face total loss even if one company does poorly.

Scale of Investment and Lower Costs

For an individual investor buying and selling stocks is a difficult task due to its high price. Thus, any gains made from stock appreciation are nullified if the overall trading costs are considered. Comparatively with mutual funds, as the money is pooled from a large number of investors, the cost per individual is lowered.  

Another advantage of mutual funds is that you don’t need to invest large sums of money. Buying equities for a profitable venture needs huge amounts of money, a minimum of few lakhs. With mutual funds, you can start with Rs.1000 and earn profits on that as well.

Convenience

Keeping an eye on the markets everyday is a time-consuming business, especially if you are investing as a side gig. There are people who spend their lives studying the market and still end up sustaining heavy losses. Though investing in mutual funds does not guarantee high returns, it is stress-free and needs less work as compared to investing in equities.

To sum it up

It is important to remember that mutual funds have their own disadvantages as well. Thus, as with any financial decision, educating yourself and understanding the suitability of all the available options is the ideal way to invest. 


Banner

What is stock market? What should I know about investing in stock market?

Nutan Gupta

14 Jul 2017

New Page 1

Stock market and the rules for investing in stock market

Have you ever been in need of cash and reached out to your relatives or friends for help? After the situation is under your control and when you have enough cash, you return your relatives or friends’ money. However, since they are your friends and family, they do not expect any returns. That said, if you were to return the money after a substantial duration, you would also consider the inflation and other interest charges when returning the money to your relative. Now, imagine that instead of a personal situation, you need money for business opportunity. Then, your friends and family who lend you would also expect returns. This is the underlying principal of stock market.

Let’s glance through the rules of investing in stock market:

Do your research well:  As a kid, you used to achieve success in exams by regularly doing your homework. This works even in case of stock market. Success is just a hands distance away if you invest appropriate time in research.

Don’t be a sheep: Following in someone great’s footstep is good. However, this is not true in case of stock market. It is advisable to avoid the herd mentality. Don’t be influenced by the actions your acquaintances, neighbors or relatives.

Invest in only what you understand: If you appear for an exam, you can answer the questions only that you’ve already prepared. You could prepare for questions only that you understood. This is true even for investments. You can be successful only if you invest in what you understand.

Be target-based instead of time-based: Even Warren Buffet doesn’t like to time the markets. Thus, instead of investing for specific time, invest with a specific target in mind.

Be disciplined: Discipline is the most essential ingredient for success. Without discipline, you tend to divert from your goals or miss the timelines and be relaxed about it. Discipline ensures that your investments help you reach your financial goals.

Be more practical, less emotional: Attachment issues are realistic and we all tend to face them at some point in our lives. However, it is best avoidable in case of stock market. It is advisable that you not get attached to a particular company or a sector. You need to see the trends and invest according to your research. Be practical and choose your stocks; don’t let your emotions chose your stocks.

Don’t put all your eggs in one basket: Change is the spice of life. Diversification is the spice of investments. To maximize your gains and insure your investment against market volatility and inflation, it is recommended that you diversify your investments and not put all your eggs in one basket.

Be optimistic but be realistic: Optimism is a great asset. It can take you places in life. However, when it comes to stock market, you need to have a perfect balance between being optimistic and realistic. You need to set realistic targets and not presume your stocks to be made of superman DNA.

Try and invest only the bonus: Occasionally, market volatility effects the stock market as a whole. Thus, you are bound to get your gains, albeit after longer time period. If you invested all your earnings into stock market without diversification, you could be in for a surprise. Hence, it is advisable that you only invest the extra amount that you have.

Scrutinize strictly: Investments are like babies. You need to constantly monitor their progress. If you allow them to grow unmonitored, you stand a chance to be in for a surprise. Thus, monitor your plans and be a proud investor.

To sum it up

Your investments in stock market have the potential to earn huge. However, it demands time and efforts. If you are ready to make some intelligent investments, you can rest assured that you will get guaranteed returns.

Have Referral Code?