A stock gives its buyer a part ownership in the company the share belongs to. A stock market is a place where the stocks are traded either through formal exchanges or over-the-counter tops. A stock market is also known as Equity Market since only equity shares are traded here and not preferred shares. It consists of two main parts – primary and secondary.
Primary Market is for new issues i.e. IPOs whereas the secondary market is for all the subsequent trades. You can use the stock market for two different purposes – investing or speculation. This blog will help the beginner in you to learn the nuances of stock market investment and what are the things you need to remember for becoming a successful investor.
Use only the extra money
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The money left after paying off the debt interest and all the other expenditures should be used for investing in the stock market. Stay away if you are unable to pay off the debts.
Try and settle the debts before you begin investing
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If you have extra cash after incurring all the expenses, try to first settle the debt that needs regular interest payments or debts, in general. Returns from stock are not guaranteed but debt payment is guaranteed. So rather pay it off first.
Don’t invest all of your savings
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The stock market is highly risky and volatile. You are not assured of a return just because you have invested in it. So as a safety norm, try and save some of your savings and invest the rest in the stock market.
Buy highly volatile shares for short-term benefits
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If a stock is highly volatile and no one knows the outcome of the stock, in the long run, it’s wiser to invest in short-term so as to reap short-lived benefits and exit the market.
Carefully hold long-term shares
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If you have trust in a company and their ethics are strong, it’s highly possible that it will grow in the long term. Hold shares of such company so as to maximize your benefits in the long run.
Choose your preferred sector
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You must choose the sector that you have expertise in or you feel comfortable to deal in. Choosing any random sector for investment won’t necessarily help your cause. Rather choose the one where you can foresee what is to come.
How to choose stocks?
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Before you choose the stock to be purchased, you need to take care of numerous factors. First, learn how to value a company and go through its financial statements to see if the company is growing constantly or not. Check the possible future predictions from the experts and see if there is a possibility of any major turnaround for that company.
Investing is an art and it can prove to be a burden if not carefully dealt with. So when you are investing, try to deal with people registered with SEBI. Make sure to check the company’s history before buying in bulk.
Always distribute your investment in three to five stocks, at least. Exercise due diligence and caution along with careful research and analysis. Don’t be the sheep in the herd, rather be the lion in the jungle.