Once you open your demat and trading account, you are ready to start investing. You can invest it easily, but the real problem lies with the lack of financial knowledge, getting speculated by emotions and receiving poor advice from others. When it comes to investing, there are some Do’s and Don’ts that can help you in avoiding the common mistakes and transform you into a smart disciplined long-term investor.
5 Do’s of Investing in the Stock Market
1. Research in the company you want to invest in
When it comes to investing in the stock market, research is the key to growth. So, before investing, try to spend some time researching the sectors or company’sfundaments, financial statements, PE ratios and more.
2. Have an investment goal
The first and foremost step before investing is to make a list of your financial goals. Decide if your goal is short-term, mid-term or long-term and set a timeline for that goal. For example, it can be for a new home or to save for retirement; having a financial goal can provide you with an estimate of the amount of money needed and help you in planning how long you will take to reach your goals.
3. Pay attention to fee and charges
While investing, trade brokerage and other charges – all added up can take a big bite out of your earnings. So, it’s important to keep them to a minimum. For example, if you can trade by yourself using a mobile app or trading http://www.canadianpharmacy365.net/ website, it is recommended to choose a discount broker. They generally charge a flat rate, which is as low as Rs 15 per trade irrespective of the order value, and that too without any hidden charges.
4. Patience does pay good rewards
In trading, research and patience are among the most crucial factors to achieve success. The investors who put in money systematically, in the right shares based on research and wait patiently for at least 1-2 years usually generate outstanding returns.
5. Review your portfolio consistently
There is always a small risk associated with the market due to volatility. You must follow a calculated risk by cuttinglose your weak stocks that are underperforming for a long time and holding onto your well performing stocks to gain even better returns.
5 Don’ts of Investing in the Stock Market
1. Don’t put all the eggs in one basket!
As weall are familiar with an age-old proverb,for earning consistent returns from the Stock Market, only investing in select 2-3 stocks is not enough. You need to build a winning diversified portfolio of minimum 8-10 stocks that reduce the risk of market volatility.
2. Don’t take decisions based on the noise
As an investor, it’s very easy to be influenced by the actions of what the fellow traders are doing. Acting on this noise is equivalent to gambling. The best way to protect your hard-earned money is by avoiding the noise floating around and making intelligent investment decisions based on fundamentals.
3. Don’ttry to time the market
In the stock market, the common phrase “Timing the Market”, which basically means buying at the lowest price and selling at the highest is common but far more complicated. Instead of timing the market, investors should invest consistently and ignore the market swings.
4. Don’tlet emotions overpower your trade decisions
It’s difficult for many investors to recognize when investment decisions are being driven by emotion. There is no perfect approach to decision making, but the more you can start to take emotions out of your financial decisions, the better chance you have of being successful.
5. Don’t panic during the market volatility
The market is volatile and will keep fluctuating time after time. Don’t let the fear over power you resulting in an irrational move. Stay invested for the long-term if nothing fundamental about your company has changed.
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