The stock market might look scary at first glance, but it definitely isn’t impossible to grasp. With the right resources, anyone can achieve financial success in no time. This guide is meant for anyone and everyone who wishes to learn the fundamentals of investing in the stock market.
When Should You Start Investing in the Stock Market
A stock market’s “best time to invest” entirely relies on the individual’s understanding of the stock market. Anyone can start investing as soon as they have a basic grasp on the stock market and the capital to back it up.
Just like everything else, the market is bound to have its share of highs and lows, so it’s best to be prepared. It’s also worth mentioning that investing is a long-term commitment, so be realistic in your expectations.
How to Start in the Stock Market
To maximize success and minimize risk, diversification is the way to go. To make the most out of your investments, put your money into seven or eight different companies. By spreading out your investments, you reduce the negative consequences that may result from one poor-performing stock. Additionally, this can increase the impact of a single stock’s good performance. Sounds great, doesn’t it?
Two investors who have very different techniques and strategies are Rohan and Sohan. Both of them put a lot of emphasis on research. Unlike Rohan, who uses a concentrated strategy with only few stocks, Sohan invests in a broader range of companies. A mix of these techniques guarantees positive results while reducing the risk further.
Stock Market Returns
Investors in the past have indeed achieved remarkable returns with impressive growth in the stock markets. As an example, some strategic investors made returns between 15 to 18% during a time span of five years. These returns tend to be superior than the interest rates on fixed deposits and are on par with other forms of investments like real estate and gold.
Bear in mind that the market is volatile, so it’s better to err on the side of caution. Having a well diversified portfolio will help you earn steady returns over the years.
How much money should you start with?
It’s easy to make your first investment as low as Rs 1,000. One thousand gives access to all. For example, Chirag a tutor who started with minimal investment and raised it as needed over time, his disciplined approach yielded good returns down the line.
Is a commerce background required to invest?
You don’t need to be a finance or a commerce graduate to perform well at the stock exchange. A diverse range of professionals, such as doctors, engineers, and even students or housewives can invest and do well. A study found that children who picked stocks that came from products they regularly consumed were more successful than chartered accountants with several years of experience.
Strategy for beginner investors
A good starting point is to pick five stocks that have outperformed the market by 10% in the last year, and to obtain detailed reports about the companies being invested in. To enhance your understanding, you can keep a diary that records the week’s opening and closing prices in the stock market.
Summary of Important Points for New Investors
- Make sure you have sufficient knowledge about the basics of the market and enough capital to get started.
- Try and Invest in 7-8 companies at minimum to balance the risk and reward.
- You can count on guaranteed returns With careful planning, in 5 years, you can expect to have garnered returns between 15% to 18%.
- Invest with no caps Initially, anyone can invest as little as Rs which makes it accessible for everyone.
- No speifics are needed Invest are required for intelligent investment decisions – Often any common knowledge is good enough.
- Adhering to these pointers and being systematic will improve your chances of being able to trade confidently and constructively on the stock market.
