1. Take Decisions according by Hearing other Views
The typical buyer's decision is usually heavily influenced by the actions of his acquaintances, neighbors or relatives. Thus, if everybody around is investing in a particular stock, the tendency for potential investors is to do the same. But this strategy is bound to backfire in the long run.
No need to say that you should always avoid having the herd mentality if you don't want to lose your hard-earned money in stock markets. The world's greatest investor Warren Buffett said, "Be fearful when others are greedy, and be greedy when others are fearful!"
2. Take decisions after doing own Research
Proper research should always be undertaken before investing in stocks. But that is rarely done. Investors generally go by the name of a company or the industry they belong to. This is, however, not the right way of putting one's money into the stock market. If you don't have time or temperament for studying the markets, you may even take the help of a suitable financial adviser.
3. Invest in business you Know and have knowledge of business
Never invest in a stock. Invest in a business instead. And invest in a business you understand. In other words, before investing in a company, you should know what business the company is in. Understand, for instance, what they buy and sell, and how they make money. Thus, the more you understand the business of the company, the better you will be able to monitor your investment. Also keep in mind the past performance of a company. That is because if a company has performed well in the past, it has a better chance of performing well in the future too.
4. Always Follow a well disciplined investment process
Historically it has been witnessed that even great bull runs have shown bouts of panic moments. The volatility witnessed in the markets has inevitably made investors lose money despite the great bull runs.
However, the investors who put in money systematically, in the right shares and held on to their investments patiently have been seen generating outstanding returns. Hence, it is prudent to have patience and follow a disciplined investment approach besides keeping a long-term broad picture in mind.
5. Do not fall in Emotions take decisions after Judgement
Many investors have been losing money in stock markets due to their inability to control emotions, particularly fear and greed. In a bull market, the lure of quick wealth is difficult to resist. Greed augments when investors hear stories of fabulous returns being made in the stock market in a short period of time. Instead of creating wealth, these investors thus burn their fingers very badly the moment the sentiment in the market reverses. In a bear market, on the other hand, investors panic and sell their shares at rock-bottom prices. Thus, fear and greed are the worst emotions to feel when investing, and it is better not to be guided by them.
6. Create a Strong portfolio with Diversification
Diversification of portfolio across asset classes and instruments is the key factor to earn optimum returns on investments with minimum risk. The reason for the relatively poor performance of portfolios of individual investors even in greatest of bull runs has been lots of variation in market breadth. Different industries have participated at different points of time in taking the markets up.
7. Always Expect realistic return and loss
There's nothing wrong with hoping for the 'best' from your investments, but you could be heading for trouble if your financial goals are based on unrealistic assumptions. For instance, lots of stocks have generated more than 50 per cent returns during the great bull run of recent years. However, it doesn't mean that you should always expect the same kind of return from the stock markets.
8. Invest only your surplus funds
If you want to take risk in a volatile market like this, then see whether you have surplus funds which you can afford to lose. It is not necessary that you will lose money in the present scenario. You investments can give you huge gains too in the months to come. But no one can be hundred percent sure. That is why you will have to take risk. No need to say that invest only if you are flush with surplus funds.
9.Monitor your portfolio Regularly
We are living in a global village. Any important event happening in any part of the world has an impact on our financial markets. Hence we need to constantly monitor our portfolio and keep affecting the desired changes in it.
If you can't review your portfolio due to time constraint or lack of knowledge, then you should take the help of a good financial planner or someone who is capable of doing that. Always keep track of your company in which you invested as sometimes company development get restricted due to Govt. policies e.g. Mining is banned for Sesa Goa and co.s like Financial technologies whose stock one trades above 1000/- now trades mere around 160/- So always keep an eyes at stocks in which you invested. Don't just put your money in stocks and don't keep reco
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Stock Market investment Stratgies
1. Take Decisions according by Hearing other Views
The typical buyer's decision is usually heavily influenced by the actions of his acquaintances, neighbors or relatives. Thus, if everybody around is investing in a particular stock, the tendency for potential investors is to do the same. But this strategy is bound to backfire in the long run.
No need to say that you should always avoid having the herd mentality if you don't want to lose your hard-earned money in stock markets. The world's greatest investor Warren Buffett said, "Be fearful when others are greedy, and be greedy when others are fearful!"
2. Take decisions after doing own Research
Proper research should always be undertaken before investing in stocks. But that is rarely done. Investors generally go by the name of a company or the industry they belong to. This is, however, not the right way of putting one's money into the stock market. If you don't have time or temperament for studying the markets, you may even take the help of a suitable financial adviser.
3. Invest in business you Know and have knowledge of business
Never invest in a stock. Invest in a business instead. And invest in a business you understand. In other words, before investing in a company, you should know what business the company is in. Understand, for instance, what they buy and sell, and how they make money. Thus, the more you understand the business of the company, the better you will be able to monitor your investment. Also keep in mind the past performance of a company. That is because if a company has performed well in the past, it has a better chance of performing well in the future too.
4. Always Follow a well disciplined investment process
Historically it has been witnessed that even great bull runs have shown bouts of panic moments. The volatility witnessed in the markets has inevitably made investors lose money despite the great bull runs.
However, the investors who put in money systematically, in the right shares and held on to their investments patiently have been seen generating outstanding returns. Hence, it is prudent to have patience and follow a disciplined investment approach besides keeping a long-term broad picture in mind.
5. Do not fall in Emotions take decisions after Judgement
Many investors have been losing money in stock markets due to their inability to control emotions, particularly fear and greed. In a bull market, the lure of quick wealth is difficult to resist. Greed augments when investors hear stories of fabulous returns being made in the stock market in a short period of time. Instead of creating wealth, these investors thus burn their fingers very badly the moment the sentiment in the market reverses. In a bear market, on the other hand, investors panic and sell their shares at rock-bottom prices. Thus, fear and greed are the worst emotions to feel when investing, and it is better not to be guided by them.
6. Create a Strong portfolio with Diversification
Diversification of portfolio across asset classes and instruments is the key factor to earn optimum returns on investments with minimum risk. The reason for the relatively poor performance of portfolios of individual investors even in greatest of bull runs has been lots of variation in market breadth. Different industries have participated at different points of time in taking the markets up.
7. Always Expect realistic return and loss
There's nothing wrong with hoping for the 'best' from your investments, but you could be heading for trouble if your financial goals are based on unrealistic assumptions. For instance, lots of stocks have generated more than 50 per cent returns during the great bull run of recent years. However, it doesn't mean that you should always expect the same kind of return from the stock markets.
8. Invest only your surplus funds
If you want to take risk in a volatile market like this, then see whether you have surplus funds which you can afford to lose. It is not necessary that you will lose money in the present scenario. You investments can give you huge gains too in the months to come. But no one can be hundred percent sure. That is why you will have to take risk. No need to say that invest only if you are flush with surplus funds.
9.Monitor your portfolio Regularly
We are living in a global village. Any important event happening in any part of the world has an impact on our financial markets. Hence we need to constantly monitor our portfolio and keep affecting the desired changes in it.
If you can't review your portfolio due to time constraint or lack of knowledge, then you should take the help of a good financial planner or someone who is capable of doing that. Always keep track of your company in which you invested as sometimes company development get restricted due to Govt. policies e.g. Mining is banned for Sesa Goa and co.s like Financial technologies whose stock one trades above 1000/- now trades mere around 160/- So always keep an eyes at stocks in which you invested. Don't just put your money in stocks and don't keep reco