Investment Tips: In the midst of the Russia-Ukraine crisis, there is a lot of volatility in the stock market around the world. The turmoil continues in the Indian stock market. In the midst of all this, investors are wondering where and how to invest. What mistakes to avoid and what to do? Especially after Corona, crores of new demat accounts have been opened. These new investors need to keep some important things in mind.
New or young investors in the stock market often make some common mistakes. Because of this they have to suffer a lot. An investor must learn some basics and avoid making common mistakes.
Let’s know ten such important things…
1- First understand the company
This is the first and basic rule of investment, which every investor should follow. Well, it is difficult to expect every man to understand every single company. Despite this, we should try to at least have a basic understanding of the company’s business, such as what the company does and how it stands in front of its rival companies.
2- What should be the portfolio
Often we see that investors either do not diversify their portfolio or end up diversifying too much. While it is most important to keep a balance between these two. For example, suppose you have ten shares and you have taken all the shares of one or two sectors only. This should be avoided. Two out of ten banking sectors, two metal sectors, two pharma sectors, two tech sectors should thus diversify the portfolio. Holding a large number of shares should also be avoided. Hence, keep a balanced portfolio to avoid risk.
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3- Simulating another’s portfolio
There is nothing wrong with looking at the portfolio of successful investors and you can learn from their investment decisions in the beginning. Along with this, develop your understanding of investing. It is dangerous to blindly follow others in the long run as every investor has different factors and plans. You can understand this thing in such a way that we all know how to drive a car, but when you take a car on the road, you drive by looking at the car in front or take your decision. You can understand how dangerous it can be to follow the car in front. The same situation holds in investing as well.
4- Don’t have an emotional attachment to your investments
The worst investment decisions are those that you take based on emotions or your emotions affect your decision making process. Instead of looking at how the company is performing and its fundamentals.
5- Stick to your investment principles
When we consider a company worth investing in, then we look at some of the key determinants related to it. We understand a lot of things like how much the company will grow and what will be the company’s strategy in future. These are important points like expansion project of the company, revenue growth, market share gain, further value addition of the product. If you find any of these things going wrong after investment, then review it immediately.
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6. Don’t be afraid of losses, learn
Yes, it is the most important thing for every investor to learn and avoid it. Everyone takes wrong decisions at some point or the other in a stock, it’s not a big deal. It is also part of our learning process. If ever you have taken the wrong shares and there is a loss, then do not be afraid of losses, get out of it. Don’t wait too long and look for opportunities in some other stock. Don’t be afraid of losses, learn.
7. Avoid Penny Stocks
Often new investors invest money in penny stocks in order to earn quick money. After hearing someone else’s that this 2 rupee stock gave 500 percent return in 6 months, one should not invest. Umesh Mehta, Head of Research, Samco Security, says that when penny stocks climb up or start getting upper circuit in it, then people start rushing to invest money. But when the penny stock falls or there is a lower circuit in it, then the investor is not able to even bet the share and has to bear the loss. So always invest in fundamentally strong companies.
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8- Stay away from the stock market who wants to become a millionaire as soon as possible
Often new investors want to become millionaires overnight in the stock market. They are listening to someone else or they consider the market as a den of speculation. Those who think like this should stay away from the market. Stock market is one of the better place to invest for long term and not a gambling house. Invest in strong company and get good returns for long term or medium term.
9 – New investors should avoid intraday trading
There is a lot of volatility in the market at present. Under normal circumstances also the new investor should avoid intraday trading. This is where money sinks quickly. Because you do not have long experience and knowledge of the market. Don’t know the specifics. So the possibility of loss is very high. So invest in a better company and not do intraday trading.
10- The more money you invest, the more you read
The more money you are investing in the stock market, the more you read. The more you know about the market, the company, the results, the advice of experts, the attitude of the global market, the better it will be for you.
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