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Once you start earning, the first thought that might come to most of us would be how do I grow using this money? Well, one of the most preferred options is by investing the surplus you have in stocks. If you are a first-time investor or just starting out, this blog will help you understand the 7 basic things you must know before you start. This blog will help you start investing in the Indian Stock Market in no time!
1. Your thought process is the king in investing:
One of the first things one must learn when starting to invest is to understand that markets are always tempting, whether it is bullish or bearish. Thus, it is very important to be able to say NO when you start investing in stocks. Investing in stocks just because your guts says so is a very risky method to follow. Sharekhan’s Knowledge centres actually aim at helping first-time investors make the right choice by educating them. As the master of investments Warren Buffett always shares, you have to prepare your mind for investing for long term gains.
2. Decide why you are investing:
Investment goals are different for different people. A 19-year-old might be investing to be able to make some money for an upcoming event, a 25-year-old might be investing for long term benefits like buying a car, home etc. A 35-year-old might be investing for future growth, and a retired person might be investing for various other reasons. So decide why you want to invest, and then you can choose the stocks accordingly. They are different stocks for different goals that one can opt for.
3. Understand the options available:
Once you have made up your mind about why you are investing, it is then time to explore the options that you have. The stock market can be broadly classified into stocks such as:
a. Value stocks: Stocks of trustable companies that are currently undervalued. A good option for long-term gains
b. Growth stocks: These are stocks of the companies that are in the industry that is witnessing good development.
c. Market stocks: These are stocks that are gaining because of the belief of the market that they will be doing well for that period of time. Eg: Pharma stocks during the pandemic.
d. Income stocks: These are stocks that offer dividends along with the returns that you get from trading. These stocks help you get regular incomes at a fixed Sharekhan’s ROAR, a 90 program that is designed to help you invest covers more details about the same! Go on and start your program now!
4. Think like an entrepreneur:
An entrepreneur does exorbitant research before making a choice. After understanding the options available, always make sure you do your research about the company that you want to invest in. Always remember that you are a part-owner of the company when you invest in it! Here are a few things that you might want to check before you make your choice:
a. Established year
b. IPO year
c. Shareholding information
d. Previous market trends
e. Market trend for the duration that you want to invest in
More detailed information about how you can choose the right stock can be found on our exclusive knowledge centre or during the Sharekhan Foresight that is organised at multiple centres across the country.
5. When would you sell?
When you are thinking about investing in a stock, you should always ask your self “When would I sell this stock if I buy this now?” This will help you reduce the risk factors that frequently come up in the market. A few factors that you should consider would be:
a. Is the stock price volatile?
b. What duration would I want to invest in this stock?
c. What were the 52 week low and high prices?
The more you question yourself, the better the answer you get as to when you want to sell your stock that you are wanting to invest in.
6. Timing is the key:
Timing is one of the key factors that you must factor in when you are starting to invest. Note that it is not advised to invest all that you want in one single shot. Instead, try investing in the following methods:
a. Regular investments: You can develop a habit of investing on a regular basis, viz weekly, monthly, etc so that the risk gets reduced as you start to follow the market at regular intervals.
b. Invest in thirds: This is another common technique used to reduce the risk of the market. Here you decide the amount you want to invest in a company and instead of investing it in one go, you invest it in three instalments at different time intervals. This may be in weeks or months. This will ensure you don’t suffer huge losses in case the market crashes.
7. Don’t become greedy!
One of the common mistakes novice investors make is that they start buying in bulk after initial success. This is very harmful. Also, do not try to overdo the trade. It would be sufficient to check your portfolio once a quarter at regular times. Overdoing it, will only induce stress to you. Set aside a particular time for it and try to stick to it.
It’s truly informative.
Thanks for sharing