Once there lived three fishes in a pond. They were best friends and almost did all their daily chaos together.
One fine day two fishermen came across the pond and were overjoyed to see so many fishes in the pond. Both the fishermen made a plan to cast the net the very next day.
Out of the three, two wise fishes made a plan to escape to a different pond. While the third fish denied saying, "The pond is our home and there has been no danger till now. It would be coward of us to run away and vacate the pond."
Fellow fishes tried to convince their friend but were unable to and, hence decided to separate the ways.
The very next day when the fishermen cast their net, the first two fishes ran away. However, the third fish got trapped as she was unable to identify the danger and take necessary steps against the problem. As a result, he was paying the price of overlooking the danger.
Similarly while you invest in equities, overlooking danger can be dangerous for your investing journey. Most important lesson to learn from the third fish is to control your emotions, never overlook your risk appetite because emotional decisions will hamper your investment.
To help you start your investing journey on a right foot, here are top 11 equity investment tips that can be used while you invest in equities:
1- Set your long- term goals
While you invest in equities, ask yourself following questions: Are you saving for your retirement, your child’s marriage, buy a home or maybe for some future emergencies?
Invest in equities with a purpose and estimate the capital required. Equity recommendations are not for those who are looking for quick returns. Invest in equities with patience and remember that the growth will happen only with time.
2 - Do not jeopardize your investment by relying on random equity recommendations
Before heading towards investment, it’s important to know your risk appetite. If your stomach has the potential to hold losses, then riskier investments that have the potential to deliver higher returns may be suitable for you. Hence, introspection is required before you invest in equities.
It’s easy to panic and sell, but markets always reward investors who follow time-tested strategies while they invest in equities.
3 - Early to investment, early to gain
Sooner you begin, the lesser amount of money you need to put in equity recommendations to reach your goals. In this way, returns from your investments shall compound over a period of time.
4 - Diversification is an essential key to investment
As wisely said, never put all your eggs in one nest. Diversifying your investments across different sectors will help you mitigate the risks and prevent you from losses.
5 - Optimum moves are often boring
While you invest in equities, always remain disciplined and invest in quality businesses over the period of time in a systematic fashion. If all this goes right, then your portfolio returns will take care of itself.
6 - Stay informed
Studying more about the businesses works wonders when it comes to equity investments. Seek out for more detailed research reports to get more information and keep an eye on the latest market trends while you invest in equities.
7 - Don’t try to time the market
Most professional or seasonal investor’s also can’t time the market. Always follow a golden rule: Invest in equities (quality businesses) when markets are low, sell when markets are high.
8 - Strategize your investments
Easy access to technology is the boon for modern age investing, but sticking to one investment philosophy is most important when you invest in equities. Consider the investment method of Warren Buffett. He stuck with his value investing principles and made sagacious equity investment decisions.
9 - Avoid hearsays, rumours and equity recommendations based on noise
The most outrageous mistake one can make is taking investment decisions on the basis of rumours and hearsays. A number of time, investors try to justify their buying decisions that are influenced by their friends, family member, and broker or office colleague. Investors should dig deep in the businesses they're holding rather than following the herd mentality. It’s important to avoid equity recommendations that are not backed by rigor research and disciplined investment methodology.
10 - Hold on long
Many of us often wonder while they invest in equities: If we invest in high-quality business stocks, then for how long we should hold it?
“If you aren’t thinking about owning a stock for ten years, don’t even think about owning it for ten minutes.” – Warren Buffett
When you invest in equities, remember that you're investing in businesses and businesses take time to grow. Stay invested and allow power of compounding cast its magic spell on your portfolio.
11 – Seek independent expert advice who can give you unbiased equity recommendations
While the markets are on an uphill movement, everything looks optimistic. However, the real prowess is tested when markets are going down. During such times, having an independent equity advisor who can give you equity recommendations backed by rigor research, time-tested strategies and multidisciplinary approach will help you to sail smoothly during such turbulent times.
Wise Spending Is Part Of Wise Investing. And It Is Never Too Late To Start – Rhonda Katz