Know these important facts before investing in stock market

Posted by Payal Kapoor on December 6th, 2019

Investing in stocks can be a smart decision if your goal is to accumulate long-term equity in order to get an early retirement and provide a comfortable standard of living for your family. However, this is a territory that must be carefully discovered. With that in mind, we have separated four very important tips to guide your first steps when investing in stocks with Astha trade.

Not all the time it is about luck

A lot of people think that the stock market is a bookmaker, something where you put your money in and rely on luck to see your equity multiply. However, this is a big mistake. Luck is always welcome, but investing in stocks depends primarily on knowledge. We are talking about a variable income market whose return depends on numerous external aspects can lead to a positive or negative result in the end.

Investing in crisis stocks is viable

In times of crisis, the market is shaken. Everyone tends to be more conservative, and it is impossible to make money in all this confusion, right? Wrong! It is during the crisis that golden opportunities arise, as it is very likely that many publicly traded companies will lose some value. This is an advantageous time to invest in stocks because as a result their price will fall. Because the market operates cyclically when the crisis is over, and your assets appreciate. It will be the perfect situation to sell your paper and profit from it.

Long term is the best initial alternative

There are those who trade the stock market, and make money from short-term transactions. But if you are starting to invest in stocks now, it is best to think long term. Those who dive into the publicly traded market keep an eye out for stock price fluctuations to profit from buying and selling fast. This requires many hours of dedication to this activity. If you do not have the time available to constantly monitor your assets, be aware that you can earn from stocks in the long run. However, if you are going to invest in stocks in the long run, you need to be resilient not to sell the securities if their values ​​collapse in a turbulent time.

Have a diversified portfolio

This is one of the most basic principles in the investment world. Let's say you have investments in companies A, B, and C. If A, and B are bad, but C has a surprising performance, the latter's gains may be more than enough to cover the losses of others and make your entire operation win a positive result. For those just starting to invest in stocks, two alternatives are ideal for keeping the portfolio diversified - ETFs and equity funds.

ETF: stands for Exchange Traded Fund, and is a fund whose purpose is to ensure a similar return on an index.

Equity funds: “basket” of shares managed by an active manager, distributed by quotas that make up the total equity of the fund.