Do’s and Don’ts of Stock Market Investing for Beginners
Making money in the stock market is an art. Often people enter in the share market and invest money without a disciplined approach. Likewise, beginners often speculate and bet on the stock hoping that the price will go up. However, this is not the right approach for stock market investment. To help the beginners with stock market investment, we suggest some of the stock market investment tips that they can follow to be successful in the market. This mini stock market investment guide will enhance your knowledge on the basics of the market and make you an informed trader or investor.
Things to do in Stock Market
• Learn and Invest
As a beginner, the first thing you must do is to acquire sufficient stock market education and learn more about it. Self-education is the best education here. Start with the basic concepts and information. By doing so, you will understand how to do stock market investments.
• Take Small Steps
As a beginner, you must start with small investments in the stock market. When you get sufficient knowledge and confidence, gradually increase your stock market investment. This approach will make you a successful and better investor in the long run.
One of the important stock market investment advice for beginners is to invest in shares after a good research. Beginners must research about the fundamentals, financials, management and many other areas before making any investment.
• Keep a Check on Emotions
Stock market investment requires a practical approach. Decisions taken on the basis of emotions can prove to be fatal. Often beginners make decisions out of panic and book losses. This must not be done and a check on emotions in the stock market is compulsory.
Another important stock market investment tips for the beginners is to diversify their portfolio. It is always recommended to not put all your eggs in the same basket i.e. not invest all money in a few stocks. Diversifying the portfolio protects you from loss in one sector against profit in another sector.
• Invest Surplus Only
It is always advisable for the beginners to invest only their surplus money in the stock market. This is because the stock market is volatile, risky and returns are not guaranteed here. Therefore, only that portion of money must be invested in the market which will not affect your regular lifestyle.
• Have Investment Goals
The investor must invest in the stock market with an investment goal. It is important that the beginners must have a future plan in mind while investing. He must know what he expects out of his investment and the time period of the investment. An investment with a goal helps you in building a good portfolio and creating wealth for the future.
The above-mentioned are a few things that a beginner must do in the stock market. Now let us learn about the things that a beginner must not do in the stock market.
Things Not to do in Stock Market
• Don’t Invest on Tips
An important stock market investment advice for beginners is that they should not buy shares on the basis on tips. Any recommendation or tips from near and dear ones must be ignored. Beginners should invest in shares only after conducting their own research and analysis about the company.
• Avoid Herd Mentality
Never invest in shares looking at what most of the people have purchased. It does not matter how much returns others have generated with the investment. Your investment decisions must be based on your own research rather than following what the crowd is doing.
• Avoid Unnecessary Risks
As a beginner, you are learning about how to do stock market investments. You must avoid investing in high risk shares in the hope of high returns. The greed of earning quick money often forces you to put money in stocks that have lot of associated risks.
• Avoid Stocks You Don’t Understand
Another important stock market investment tip for beginners is that they must avoid investing in stocks which they don’t understand. Beginners must take time to understand the business of the company and invest only after knowing its full profile. Investing after analysing the future performance of the company will help you in making higher returns.
• Avoid Overtrading
As a beginner and an investor in the stock market, your aim is to invest money for the long term. You must avoid taking intraday trades because that is for people looking for short term gains. Moreover, overtrading often results in capital erosion and huge losses. As an investor, you must analyse the company and take a long term bet.
The above-mentioned points act as a stock market investment guide for beginners. If you are a beginner and want to invest money for the long term, you can open a demat account with IndiaNivesh. Our in-house professionals and experts help you in making a diversified portfolio after understanding your risk appetite and duration of the investment.
Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.