Stock market investing is an enticing avenue for every investor. A reason why mutual fund investment, through Systematic Investment Plan (SIP) is gaining popularity. After all, which other avenue promises quick bucks and limitless returns?
However, the stock market is a complex avenue, unlike mutual funds which are professionally managed. You need a bit of an understanding when investing your money in the stock market India. If you are a beginner in the stock market, here are some easy stock market investing tips to invest your money effectively:
- Start with the Basics
Okay, so this one is a no brainer. When you invest in a particular avenue, you need to understand how the avenue works, right? Of course, you don’t need to enroll in a course or read thick books and become a pro. Just a basic understanding of how the market works would be good. Understand the trading concept from your friends, peers, family members, or even your trusted broker. Invest with your eyes wide open and not because you want to follow the trend.
- Get the Tools of the Trade, i.e., a Demat and Trading Account
Stock investing needs you to have a demat account and trading account in your name. Both of these accounts are linked with your savings account from which financial transactions take place. The trading account is for buying or selling stock, while the demat account is for storing them. You need to pick a broker who would allow the opening of a demat, trading, and savings account using which you would be able to trade.
- Handpick the Right Stocks
This is where stock investing gets tricky and so investors dilly-dally with their investments. Relax! It is not that difficult. Start by monitoring the market for a few days. Talk to your stockbroker or other seasoned investors to identify potential stocks. Then, monitor the performance of the shortlisted stocks for a few days. Past performance is not an indicator of future returns, but it can give you a context into the stock’s stability. Research the company into whose stock you want to invest. If the company has strong fundamentals, its stocks would be stable too.
- Don’t put all Your Eggs in one Basket
A word to the wise – diversify. Don’t play favorites when it comes to picking stocks. Choose stocks of different sectors for a diversified portfolio. Why? To spread the portfolio risk. The stock market is a roller-coaster ride. While a handful of thematic funds might perform well, another might not. If you follow thematic investing, you would incur a loss sooner rather than later. But, with diversification, you minimize the volatility risk, and your stock portfolios become stable.
- Don’t Rush. Start Small
When you are starting your journey into stock investing, don’t rush. Remember how babies take small steps when they learn to walk? Apply the concept in investing. Dip your feet a little by little to test the waters. Invest a small amount of money first and then supplement your investments as you gain confidence. As you start small, your risk exposure would be less, and you can also learn the tricks of the trade.
- Remember, Stock Investing and Mutual Fund Investing are Different
When you seek to invest in the market, the primary two choices are stocks and mutual funds. But remember, both are different. In stock investing, you pick and invest in particular stocks. However, in mutual funds, you contribute to a pool where fund managers invest in stocks of their choice. If you want to invest in individual stocks, invest through the stock market, and for professional portfolio management, mutual funds would be suitable.
- Patience, My Friend, is a Virtue
This last piece of advice is to make you a smart investor. Though the stock market India has the potential of generating attractive returns, you cannot ignore the risks. Stock trading needs patience. If the market is scaling new heights, invest carefully as a correction might devalue your stocks.
Similarly, when the market has crashed or entered a downturn, be patient. The market will recover; it always does.
So, approach stock investing like playing a cricket test match. Though 20-20 matches are thrilling, they keep you on the edge of your seat. If you want short-term thrill, you can play the 20-20 format through intra-day trading. But if you are a serious investor, be patient, and you would be rewarded.
This is how you invest money into the stock market, with care and consideration. Also, you need to track your investments, not to count your gains but to avoid losses. Monitor your stock portfolio regularly to weed out underperforming stocks that incur an opportunity cost. Also, check which stocks to stay invested in and which to redeem for booking your profits.
Conclusion
For easy stock investment, you could consider investing via Stoxbox. Through Stoxbox you can invest in high-quality ready-made portfolios having the right mix of stocks and ETFs that are backtested and based on thematic investment models curated carefully through quantitative research method by their Quantitative, Fundamental and Technical research teams. By investing through Stoxbox, we can easily say that investing money in the stock market is not hard. You just need the right platform to start and start wisely.
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