Stock Investment Is Not Rocket Science
Posted by niveza on February 28th, 2018
Investment is one of the most important aspects of your life. Unfortunately, many people realise this quite late in their lives. By the time they realise it, the best friend of the investor - time, is no longer with them. On the other hand, those who make the right investment choices, lead a happy and a satisfying life. So what are the right investment choices? By investing in which instruments will you get the best results? Going by the historical data there is only one investment instrument which has created enormous wealth for the investors - stock investment (equity). Ironically, people have the maximum misconceptions about stock investment i.e stock investment is a gamble and it's a game of rich people and so on and so forth.
However, contrary to all these misconceptions, stock investment is a potent tool for wealth creation and as a smart investor, by all means, it should feature in your investment plan.
To be fair, we have to admit one thing, stock investment is an extremely complex matter. You need to have a thorough understanding of the market and its operations. It's complex nature is one of the biggest reasons why general investors shy away from stock investment.
But there are ways to overcome these complexities. Let's list out things which investors need to remember before entering Stock Market. Things which will ease the way for new investors into the stock market.
Get Your Basics Right
First things first, before you start anything new, it's imperative to understand everything about it. But when it comes to stock market, there is nobody who can claim that he knows everything about the stock market. So, at least you should know the basics of the stock market. If you start with a solid foundation you can build on it gradually as you go ahead with your investment plan. Taking the buying and selling calls as per your broker is counter-productive for your long-term investment plans.
Focus On Long-term Stocks
In the initial stage, you will understand that the stock market is an ocean of stocks. The experts categorise them in small-cap, mid-cap and large-cap stocks. But general investors should only see them as good stocks and bad stocks. You have to avoid bad stocks and invest in good stocks. Having said that, good stocks can be sub-categorised in terms of their growth potential. Some have long-term growth potential while other have long-term growth prospects.
Though there is nothing wrong in banking on the short-term growth potential but the principal focus should always be on building a long-term corpus.
Brokers Aren't Your Best Friends
The biggest roadblock of your long-term goal is your stock broker. Brokers don't like long-term investment perspective. It doesn't agree with their business. It's simple, the more you trade the more brokerage brokers get. Naturally, brokers will try to persuade you to do maximum trading and less investing as to ensure maximum brokerage for their firms. But as a smart investor, it's your responsibility to not fall prey to the brokers' glib talk and pursue your long-term objective.
Don't Trust Your Friends & Neighbours' Stock Tips
In the stock market, "stocks tips", "multibagger stock tips", "guaranteed return tips" keep floating around. Mostly you will hear it from your friends, relatives or neighbours. All they assure is a failure, if not in the first go, it will come sooner than later. Just imagine, you work so hard to earn money and some guy comes around and asks you hand over your money for some stock which you haven't even heard of. Is it a wise thing to believe such baseless share market tips? A lot of time and efforts have to be put in to find good stocks which are worth holding on a long-term basis.
Spend For Good Investment Advice
Have you ever asked this question to yourself that why there is such a less participation of investors in direct stock investment? The answer is simple, many people find stock investment too complicated to comprehend while some get a bad experience and drift away from it. Stock advisory firms can be a perfect solution for such disgruntled investors.
Stock advisory firms provide all the support for the investors who don't understand the market and are not willing to devote time for research and analysis. An advisory firm helps you to identify undervalued stock, tells you when to enter and when to exit and much more. Some advisory firms also offer portfolio management services. So, if you don't mind spending a little on a quality advice, the sky is a limit for you in the stock market.
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