First Time Equity (stock) Investors
Here is all you need to know
Know the rules of the game
“Equity market (commonly known as share market) is place of possibilities. However, you can still play a good innings by following these important points”
Understand your purpose of investment
We advise you to have a “clear vision” before you push your money into stocks
Before you invest your money, broadly define your purpose into “Savings” or “Surplus”.
This would help you choose your stocks
For instance:
“If you are looking for ‘savings’, you can go for blue-chip stocks and hold them for a longer durations (Delivery), and if you are looking for ‘surplus’ you can use the ‘fast entry, fast exit strategy’ (Intraday)”
Keep your ‘time objective’ in mind
Doing the right thing at the right time would help you achieve your objective
While buying a stock, have a clear time-bound objective ready for its sale
For instance:
If you are investing for retirement, calculate your retirement age and expected return from the stock
Know your risk appetite
Risk appetite refers to the capacity of taking a risk at a given time. This would help you pick right stocks
Aggressive investors do not hesitate to take risks while investing in vulnerable stocks
Moderate investors take medium risk. However, they might buy tricky stocks sometimes
Defensive investors will not invest in dicey stocks and will only invest in stocks they trust
Know your risk profile(Aggressive–Moderate–Defensive)
Invest in what you understand the BEST!
It is always good for you to invest your money in the business you know better
This will help you understand future scope for the sector, expected growth, expansion, and risk forecasting.
For instance:
If you know the retail shopping market, you can make smart investments keeping future scope for FDI, FII, and growth prospects in mind
Stay updated on your stocks
Once you push your money into the market, it is extremely essential to track the progress of the invested stock
You should track all the news reports, discussions, court judgments, and other important updates such as M&A
This will prepare you for unforeseen events in the market
Don't fall prey to "Tips" or "Rumors"
Nobody can give you a definite tip about stock prices. Do not fall prey to such tips
Rumors are false information passed by people. Always confirm the source of the information
You can track their authenticity by approaching the spokesperson of the organization, stock exchanges official website/handles, and SEBI notifications.
Read financial reports of your investment
Reading periodic reports and financial journals will help you get actual insights
Company's annual reports and quarterly reports will provide you with credible numbers
These reports will also update you on the company's future avenues
Do not forget to SALE your investment at the Right Time
As discussed, stock trading is a game of possibilities. Thus, as an investor, it is important for you to exit the stock at the right time
Do not wait for unrealistic profit and grab the realistic profit
They say, “In stocks, your exit is more important than the entry”
Thank YouFor more information, visit
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Equity investments involve market risks.
Please read investment related documents carefully before investing.
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