Here are few helpful guidelines for the newbies who are just entering the stock market world.
1. Get prepared for the worst:
First of all, figure out how much extra money you have that you can afford to lose without affecting your daily life. Never trade or invest on loans or leverages.
2. Know the risk:
About 90% of people lose money in stock market. The common reasons for losing money are- investing based on tips & recommendations, no prior study of company before investing, zero diversification etc. Avoid those mistakes.
3. Understand the reward:
Warren Buffett, the greatest investor of all time has earned an average return of 22% per year for a per of last 5 decades. You might ask me- how the hell then Warren buffet became the richest man in the world. The answer is- power of compounding. His net worth increased exponentially with time. Do not try to make money fast. A return of 15–20% per year is considered good in stock market. And remember, you get only 4% simple interest on saving account. This return is much better than your saving returns.
4. Learn how market works:
First learn, then earn. Read read and read. Warren Buffet said in one of his interviews that he reads almost 500–600 pages a day. How many do you read? I do not expect you to read that much. But learn as much as possible before entering the market.
5. Invest in blue chips first:
For the beginners, I always recommend to invest in blue chip stocks. Blue chips are the stocks of those reputed companies who are in the market for a very long time, financially strong and have a good track record of consistent growth and returns in the past many years. For example- ITC, RIL, TCS etc. The risk involved in these stocks are quite low. Once you have enough knowledge and experience, then you can start investing in the companies of any size which you are confident about.
6. Ignore the beginner’s luck:
You might make a very good start and make 50–60% returns in first few months. In such case, do not get greedy. There are many who starts over trading due to their beginner’s luck and turn out to be a loser in the end. Do not become one of them. Stick to your strategy and budget. Have patience and invest intelligently.
Image Sources: Google
That’s all. I hope this post is useful to the readers. Further, if you want to learn stock market from scratch, you can find this link useful: New to Stock Market? Start Here | Trade Brains
1. Get prepared for the worst:
First of all, figure out how much extra money you have that you can afford to lose without affecting your daily life. Never trade or invest on loans or leverages.
2. Know the risk:
About 90% of people lose money in stock market. The common reasons for losing money are- investing based on tips & recommendations, no prior study of company before investing, zero diversification etc. Avoid those mistakes.
Read more here: 6 Reasons Why Most People Lose Money in Stock Market
3. Understand the reward:
Warren Buffett, the greatest investor of all time has earned an average return of 22% per year for a per of last 5 decades. You might ask me- how the hell then Warren buffet became the richest man in the world. The answer is- power of compounding. His net worth increased exponentially with time. Do not try to make money fast. A return of 15–20% per year is considered good in stock market. And remember, you get only 4% simple interest on saving account. This return is much better than your saving returns.
4. Learn how market works:
First learn, then earn. Read read and read. Warren Buffet said in one of his interviews that he reads almost 500–600 pages a day. How many do you read? I do not expect you to read that much. But learn as much as possible before entering the market.
Read further here: Learn how to follow Stock Market and trends- Trade Brains
5. Invest in blue chips first:
For the beginners, I always recommend to invest in blue chip stocks. Blue chips are the stocks of those reputed companies who are in the market for a very long time, financially strong and have a good track record of consistent growth and returns in the past many years. For example- ITC, RIL, TCS etc. The risk involved in these stocks are quite low. Once you have enough knowledge and experience, then you can start investing in the companies of any size which you are confident about.
Also read: How to create your Stock Portfolio?
6. Ignore the beginner’s luck:
You might make a very good start and make 50–60% returns in first few months. In such case, do not get greedy. There are many who starts over trading due to their beginner’s luck and turn out to be a loser in the end. Do not become one of them. Stick to your strategy and budget. Have patience and invest intelligently.
Image Sources: Google
That’s all. I hope this post is useful to the readers. Further, if you want to learn stock market from scratch, you can find this link useful: New to Stock Market? Start Here | Trade Brains
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