Making money is a need for survival. Investment is a source of earning money through money. This method though lures many, but it is important to understand that making money is not as easy as it may seem. Not only an ounce of patience is required but also a great deal of courage and discipline. With these things on the list, a person should not forget that as all other fields of work and service investment sector requires its own knowledge and skill set. For which one has to go through rigorous research and has to give time for understanding the market and its working in a very keen manner.
Talking about the risk and courage, the stock market is very volatile in nature. With abilities to bring a man from rags to riches, the stock market also has the ability to bring a man from riches to rags. Due to this many potential investors stay in a dilemma whether to invest or not, if yes then where and how much, whether to buy, hold or sell stocks.
Though no one can create a fixed rule or formula to successful investment as the stock market is dynamic in nature, but there are certain rules or guidelines that can help any investor to come out of the above dilemma mentioned above.
Rules
- Investment Is Your Choice: You should always remember that it’s your money and it’s your choice to invest or not. You should never get carried away by what others or media says about investment. Invest where you want and when you want. The amount to be bought and sold is your choice, so don’t make decisions based on what others are talking about it.
- Never ever expect: Returns are what one waits for and there’s no harm in expecting good returns. But the harm is when expectations are unrealistic and can lead to trouble. Even Warren Buffet states that any return above 12 percent is pure dumb luck and is as good as inviting troubles for self.
- Have complete information: Always do complete research and understand the working of the stock market from scratch before taking any decisions about investing, buying more, selling or just holding, and make sure you have gathered all possible knowledge. Compare brokers, if you decide to invest in them.
- Invest in a business you understand: Investment is not a one-time affair; you need to keep an eye on the market. And whatever decisions you take are all based on past trend and futuristic assumptions. You can understand the trend or assume for future only when you understand how that particular business works whose stocks you are investing in.
- Have Patience: Returns in the stock market don’t multiply overnight. For better returns and to make big money one must be patient enough to let stocks rise and fall and understand market fluctuations. Sometimes with the patience of years, people gain in multiplied amounts while with no patience people loose what is earned.
- Don’t Take Decisions Based On Rumours: There may times when media and your surroundings would all turn negative about a certain stock or may become too positive about an organization/market growth. Even there may be symptoms of great growth in market or share prices. But you should never become anxious about such noises and take decisions. Instead, understand the market conditions, analyze the situation from all angles and only then decide to invest or disinvest.
- Be the owner: It’s your money and your stock, never get blindly guided by what others say or suggest. When investing via brokers have your say, take your decisions and compare brokers before handing over your money to anyone.
- Have a broad portfolio: Don’t get stuck in one form of investment such as shares or SIP or mutual funds. Have a broader portfolio, invest in various different companies. Invest in shares, equities, mutual funds, have SIPs, etc.
- Never invest money you need: always invest what is surplus and not what you need as market conditions may lead to loss or profit is a risk and no instant retunes can be guaranteed.
- Monitor rigorously: You need to keep analyzing the market and take instant decisions of buying, selling or holding accordingly. As one missed opportunity can lead to a tremendous loss.
Making investment is not that tough. All you need is market knowledge, understanding of market functions and fluctuations and you are ready to earn money from your money.