Are you a beginner planning to dive into the wide stock market ocean, but a bit hesitant owing to the market volatility? If yes, this post shall take you on a joyful ride understanding the basics of stock markets. How to invest your money in stock markets cautiously? What are the Do’s and Don’ts of stock market investing? You’ll probably find the answers to all these interesting queries in a simple manner right here.
No doubt, your initial plunge into the investing world can be full of both anxiety and enthusiasm. But, investing can be turned up into a smooth and an organised expedition provided you are well acquainted with the very basics of investing.
“When it comes to investing, we want our money to grow with the highest rates of return, and the lowest risk possible. While there are no shortcuts to getting rich, there are smart ways to go about it” nicely quoted in the words of Phil Town, a motivational speaker and famous author.
So, don’t miss to grab these useful insights and smart ideas for investing in the stock market. A bunch of do’s and don’ts that can help you convert from a newbie investor to a smart disciplined long term investor
What are Do’s of Stock Market Investing?
- A ton of research: Getting adequate information is the key to achieving success in any field. The same applies to stock market investing also. Do thorough study on the market, stocks you wish to buy and various risks associated. Collect requisite data to improve your basic financial knowledge.
- Diversify investments: “Don’t put all your eggs in one basket” the most common quote you hear when talking about investing. So, learn to diversify your investments and distribute the risk factors. Avoid your reliability on just one asset class or one type of investing alternative.
- Check fee and charges: This needs to be checked beforehand to avoid any confusions later on. Make sure to know the trading account opening charges, maintenance, brokerage or any other fee thereon. Clarify all the important details from your stock broker.
- Take calculated and smaller risk initially: You can start investing smaller amounts at an initial stage rather than betting on huge figures. Nobody likes losing money especially when you are an amateur.
- Have patience: You can’t get rich in a short span of time. As a stock investor, you need to practice a lot of patience for taking the right decisions in the market.
What are Don’ts of Stock Market Investing?
- Don’t panic: You need to control your emotions. “Slow and steady wins the race” applies here. Don’t overreact randomly looking at the markets gains or falls.
- Don’t get enticed on short gains: Short term gains seem enticing. But, you must try and look towards building a long term strategy to generate returns in future.
- Don’t follow herd mentality: Following your friends is a general human tendency. But, keep yourself away from this mentality while trading or investing in stocks. Your investments should be synced to your own priorities and financial goals.
- Don’t get carried away: Not to be taken away by the new highs in the stock market. You might have experienced appreciation in your investment value in the bullish market. But, you may also see a correction in the near future that shall average out your abnormal gains anytime.
- Don’t indulge directly in day trading until you master the skills: If you feel unprepared for the direct stock investing or day trading, take your own time. Make yourself completely ready before you jump into it. Till then, you can take up the mutual funds route that’s an indirect way to put your money in stocks through regulated fund houses.
Stock Market Basics: A Final Word
Every step that you take in the stock market plays a very crucial role in choosing the right stocks. Learn from your past mistakes and avoid taking bigger risks initially.
Once you get well versed with the investing strategies, you can surely follow better and sensible approaches to fully participate in the stock markets. It takes a substantial amount of time to learn new things and implement them practically. Stock market basics are no exception to it.
Although, investing in stock market seems to be a lucrative and quicker way to become wealthy. But, very few investors actually capture and implement the exact strategy of making money in the stock market. However, you can strengthen your investing and trading skills gradually over a period of time.
Whenever you think of stepping into this investing arena, just recall these do’s and don’ts immediately. These shall guide you in your investment journey. Do you have any other important stock market tips to share with us? Go ahead and pen down the same for our readers.