Everyone have heard about the enormous profits earned by people investing in stock markets. This causes a greed among investors to earn quick bucks. Equities have definitely given biggest returns amongst all other investing avenues. But in India, lot of people have still stayed away from stock market. How & When to start investing in equities?
I have seen first timers getting the advice to go the Mutual Fund route to equity exposure. I do not think it should always be that way. If you are willing to do some hard work, have long term goals and patience then despite being a first-timer, you should seriously think about investing in equity markets. Some tips on how and when to start :
1) There is NO best time to start investing. Rather than waiting for a bear phase or identifying the start of bull phase, invest when you can some cash to spare.
2) Keep in mind that stock market means risk. Dont expect astronomical returns or scamper away on the first hint of losses. Stock market wont give you instant richness, but a disciplined approach can help you achieve your long term goals.
3) Stock markets are just one avenue of investing, dont put all your eggs in this basket.
4) Get a Demat Account as soon as possible and choose a online broker who have minimum charges for transactions. Get aware of various terminologies and ask the broker to provide you a demonstration.
5) Read, Research and Understand before investing. Dont go by the tips from relatives, friends, magazines or websites. If anyone provide you any information about any company cross-check it, look at the history and try to identify a trend.
6) Instead of investing large money in a single chunk, spread your investments in time. You may have 50,000 Rs for investing, but do invest it over many months and across different companies.
7) Most first timer think that they need atleast few thousands of ruppees to start investing. You can start with whatever money you have. The lesser the better since if you gain, you will be thrilled that you started building your portfolio from miniscle amount. If you loose, you wont have much regret over the amount you lost and you will gain valuable experience.
8) Dont be greedy if you gain. It is easier said than done. If you gain, start believing yourself and build confidence but dont overdo it. Gordon Gekko said "Greed is good", but for first timers, it is better to start slowly. Think of this as a marathon than a sprint.
9) Dont care much about short term news report of stock markets going up or down. Stay invested for long term.
10) After getting Demat Account, start reading, researching and upgrading yourself about the terminologies and the way to do research. But dont keep lingering too long. Use a small amount and start investing. Unless your money is involved, you wont learn quickly.
I have seen first timers getting the advice to go the Mutual Fund route to equity exposure. I do not think it should always be that way. If you are willing to do some hard work, have long term goals and patience then despite being a first-timer, you should seriously think about investing in equity markets. Some tips on how and when to start :
1) There is NO best time to start investing. Rather than waiting for a bear phase or identifying the start of bull phase, invest when you can some cash to spare.
2) Keep in mind that stock market means risk. Dont expect astronomical returns or scamper away on the first hint of losses. Stock market wont give you instant richness, but a disciplined approach can help you achieve your long term goals.
3) Stock markets are just one avenue of investing, dont put all your eggs in this basket.
4) Get a Demat Account as soon as possible and choose a online broker who have minimum charges for transactions. Get aware of various terminologies and ask the broker to provide you a demonstration.
5) Read, Research and Understand before investing. Dont go by the tips from relatives, friends, magazines or websites. If anyone provide you any information about any company cross-check it, look at the history and try to identify a trend.
6) Instead of investing large money in a single chunk, spread your investments in time. You may have 50,000 Rs for investing, but do invest it over many months and across different companies.
7) Most first timer think that they need atleast few thousands of ruppees to start investing. You can start with whatever money you have. The lesser the better since if you gain, you will be thrilled that you started building your portfolio from miniscle amount. If you loose, you wont have much regret over the amount you lost and you will gain valuable experience.
8) Dont be greedy if you gain. It is easier said than done. If you gain, start believing yourself and build confidence but dont overdo it. Gordon Gekko said "Greed is good", but for first timers, it is better to start slowly. Think of this as a marathon than a sprint.
9) Dont care much about short term news report of stock markets going up or down. Stay invested for long term.
10) After getting Demat Account, start reading, researching and upgrading yourself about the terminologies and the way to do research. But dont keep lingering too long. Use a small amount and start investing. Unless your money is involved, you wont learn quickly.
hi,
ReplyDeleteThis is really nice one. Keep Going.........
I certainly agree that profits can be made in the stock market, but it is not an easy task if you want to do it on your own. By doing it on your own, and doing it effectively, you minimize the costs and thereby you can maximize your return on investment.
ReplyDeleteBut its going to take diligence, patience, and time. But in the long run, it will be worth it.
I think that the earlier in life one is able to start investing the better. This way you benefit from the principle of compounding and you have time to recover from the impact of any severe losses. As far as actually entering into a buy transaction that would depend on your goals. You can buy when the "stock" is on sale, or if you really feel that the stock is worth it's market value, you can buy it even at a higher price especially if it has a potential to go even higher)
Yes the stock market definately means risk and we should try to minimize and guard against loss as much as possible. As I am new to investing I am still learning how to best do this. I think that the more knowledgeable you are about the business you are investing in, the better decisions you can make in this area.
There are so many other types of investments besides stocks and I think it is wise to have some diversity in this area. However, someone who has been in this longer than me and who has had a lot more success says that you should diversify if you are a novice but if you know what you are doing then you should have more in the investment that will bring you the greatest return.
This makes sense to me.
Lastly, I agree that reading and researching is the key to helping you to be successful. Read books, magazines, newsletters, and listen to audio books, and anything else that will help you to make more informed decisions.
Again, a lot of work, but I think its worth it!
This is a new journey for me, but I'm having fun: http://ourstockmarketjourney.blogspot.com/
Be well!