There are many books and even internet is swamped with information on matters related to how to invest in stocks. However, if you’re aiming to become filthy rich through stock market investment, then it demands more than reading and basic research skills.
Our experts from the R&R desk shares 11 handful tips on how to invest in share market by adopting the rights skills and methodology.
1. Start with planning
To create wealth via stock market investment, it is important to take some time off and list your goals and timeline for it.
2. Start early
Investing in the right stocks should be started as early as possible. This will help you to reap benefits of compounding and thus, create wealth over a period of time.
3. Invest for a long-term
Here is a popular stock advice by Warren Buffett: ‘If you are not willing to own a stock for 10 years, do not think about owning it for 10 minutes.’ Also, the risk associated with the equity market starts getting diminished over a longer term.
4. Don’t get influenced by the short-term volatility
Successful stock market investors abstain themselves from whimsical buying and selling. Instead, they look out for stocks that have the potential to not only survive but thrive even during a market downfall.
5. Don’t hesitate to cut losses or book partial profits
Many investors attach sentimental value to the stocks purchased and avoid selling them in a hope that their value will increase again. But it is advised to take a rational call and sell such non-performing stocks. Also, many avarice investors assume that the stocks will keep marking new highs. Sometimes, due to the change in fundamentals, the company may not hold the same growth assumption. Here, it is advisable not to wait for further appreciation and book partial/full profits.
6. Stay away from penny stocks
Few investors hold the belief that penny stocks restrict the losses because they are of smaller denomination. However, these stocks are riskier and you can end up sinking every penny you invested. The information about such stocks are restricted and they are not highly regulated.
7. Choose the right stock market expert
Each investor has a unique investment objective and risk appetite. Hire a SEBI registered expert with an established track record who can give you the best stock advice that suits your risk appetite.
8. Don’t believe what others are saying
Stay away from market rumours, hearsay and tips. Conduct your own research or more better, hire an expert who can monitor investments on a periodic basis.
9. Take control of your emotions
Emotions such as greed, anger, and guilt can restrict our profits. Hence, it is recommended to take rational decisions based on facts and research.
10. Don’t try to time the market:
Timing the market is a game of loss. Rather, try to pick the right stocks with a strong balance sheet and a history of fair and credible management practices to create wealth in a long-term.
11. Follow a disciplinary action towards your investments.
Invest regularly, monitor your investments on a periodic basis (or hire a professional to conduct this task), stick to your investing approach, don’t lose track of your investing goal and have an open mind.