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)
Section
1-
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.
Section
2-
Investing
rules-
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.
Happy learning
VIP
