Friday, 29 July 2016
Investing in stocks-
Direct exposure to Investing in equities is riskier than any other asset class and demands more time. But it is probably more rewarding than you can imagine. Stocks have outperformed every other asset class over the long run.
Before start investing, you should be aware about the real situation-
1. Most of individual investors are suffering from losses in this field.
2. You cannot be a millionaire overnight; Investing is highly serious business and requires time, focus, knowledge & patience to mint money.
3. Lure of easy money brings investors into stock market; however making money in stock market is not that easy. Investing is like addiction and once you took the first step, coming out is merely possible. Suppose if you are making losses in stocks, it will tempt you to invest more to cover your losses by taking more risk you are comfortable with. It will erode you slowly and you will be like frog (Must read the boiling water and frog story)
You should minimise the stress on yourself by taking care of following things-
1. Plan for your life goals.
2. Evaluate your risk taking capacity.
3. Prepare contingency fund based on your situation, It should be minimum 8-10 times of your monthly expenses.
4. Buy good medical insurance to cover your family.
5. You should have good term insurance also.
6. Make yourself debt free.
Less stress will improve your capability to analyze and lead you to take good decisions.
1. "Be fearful when others are greedy, and be greedy when others are fearful!" – Warren buffet
Your investing decisions should not be influenced by others like relatives, neighbours, tv etc.
2. Make a disciplined approach, learn from your failures and improvise.
" You don't have to be a genius or a visionary or even a college graduate to be successful. You just need a framework and a dream." -Michael Del
3. Put your emotions aside during investing, it will bias your decision.
4. Investing in stocks at bottom and exit at top is a myth, follow value investing approach.
5. Invest surplus funds only.
6. Do not watch your stocks on daily basis, it will create anxiety and will make you worried. Believe in your strategy and give some time to grow your money.
This article has been prepared for creating awareness between novice investors. Section 1 & 2 mentioned above will be elaborated in coming post.