Investing directly in share market, also known as direct (equity) investing, takes quite a bit of time and energy, not to mention loads of research and patience. That is not to say that it cannot be mastered. On the contrary, equity investing can be aced – here is how.
Successful equity investing is about embracing certain resilient rules or principles, the golden rules of investing, if you may. Below we elaborate on the most enduring rules of successfully investing in shares.
- Avoid listening to the crowd
Creating a buzz about a certain stock at times turns out to cause confusion and often many investors fall for such news and end up investing a hefty amount. One should avoid this herd mentality and rather study the company reports, history, and overall performance thoroughly.
- Take informed decision
Before making any investment decisions in stocks, a thorough research should be conducted. Don’t just rely on the name and fame of the company. A proper background check is a must, as it all concerns with the matter of money.
- Invest in business you understand
You should invest in a business you understand and not the stocks. Having an in-depth knowledge about a business is a good way to make investment decisions, as you know all the loopholes of that industry and it is easier to understand what the company you are planning to invest in does.
- Don’t try to time the market
Always remember one thing; stock markets are volatile in nature. Waiting for the right time is not at all a feasible option to go for. Often people try to time the market by making predictions about the highs and lows that might happen in the future. Don’t stick to such predictions, analyse the effects of the current and upcoming economic events and study the factors which might affect the market on goings.
- Follow a disciplined investment approach
A disciplined investment approach is usually termed as thinking long-term! Making long-term investments to achieve certain goals turns out to be of profitable. Even if you invest in just one stock for long-term can result positively; as the right shares held patiently, results in good returns!
- Do not let emotions cloud your judgement
Often during a Bull market, out of greed, people tend to gather more! At times this approach reverses back, thus leading to a whole tragic scenario. And exactly opposite happens during a Bear market, out of fear, people sell off the stocks which witnessed just some minor losses. One must have a control over their emotions, as any drastic step may directly affect the money related decisions.
- Advantages of investing in Stock Market
- Investment Gains
You get a chance to grow your money by investing in stock market. Investing in different stocks helps you to build your wealth by leveraging growth in different sectors.
Individuals investing in different types of products secures the benefits of diversifying their portfolio. Stock markets are volatile in nature, thus holding onto stocks might lead to losses. Investing in stocks is a riskier job, while investing in bonds leads to slow and steady growth of your investments. It is important to diversify your portfolio to have a steady income in hand as well as make your money grow.
Buying a share of a company is as equal to owning a part of the company. A shareholder has a benefit as they are a part of the business. Shareholders have a right to vote with corporate board members and also taking decisions on certain businesses.