PROPOSITIONS FOR INVESTING IN STOCK MARKET
The temptation for excessive money has always propelled investors into the lap of stock markets. However, making money in equities is not that easy as it not only requires huge amount of patience and discipline accompanied by a great deal of research and a profound knowledge of the market, among others.
Adding to this fact, the volatility in stock market has left investors in a state of confusion in the last few years. In such a scenario, investors are in a dilemma whether to invest, hold or sell.
The typical buyer’s decision is heavily influenced by the actions of his acquaintances, neighbours or relatives. There is a tendency that if everybody around is investing in a particular stock, there will be an automatic inclination for potential investors is to do the same. Nevertheless, this strategy is bound to play like a boomerang in the end (long run).
- We do not need to mention every time about the hard-earned money in stock market whether investors are going through a rough patch. The world’s greatest investor Warren Buffett was surely not wrong when he said, “Be fearful when others are greedy, and be greedy when others are fearful!”.
- Appropriate research should be and suitable inquiry should be arrived with before investing in stocks. However, unfortunately, that is rarely done. Investors are generally stimulated by the name of a company or the industry they belong. This is the most foolish way to put one’s money into the stock market.
- Investors should never invest in a stock instead, they should check up on the business in. Most importantly, invest in a business one understands. In other words, before investing in a company, people should know the status of the business the company is running in.
- Diversification of portfolio across asset classes and instruments is the key factor to earn optimum returns on investments with minimum risk. Level of diversification depends on each investor’s risk taking capacity.
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