7 Golden Rules for investing in the stock market, 1.Set Reasonable Goals 2. Prioritise the Long Term3. Never Succumb To Herd Mentality 4. Diversify 5.Complete Your Homework 6. Constantly Monitor Your Portfolio 7. Do Not Allow Your Emotions to Take Control of You,I Want to learn how the stock market works and how to start out in it.
Here are the 7 Golden Rules for investing in the stock market:
Buying and selling of stocks in the share market is such a simple activity that almost anyone can do it. But it is not everyone’s ability to pull a profit out of it. Making a profit in the share market demands patience, discipline and fine research.
Warren Buffett, the greatest investor, who bought his first share back in 1942 at any age of just 11 years. Since then he has been a consistent investor and profit maker of the stock market. He can visualize what a normal investor can’t even be aware of. His principles of investing which may seem simple to understand but the profound depth of its meaning is realized after many years of investing. Until you reach that stage, the behavior of markets would have left you wondering about how to avoid losing your hard-earned money. In this article, we will break it down for you through 7 golden rules OR 7 Golden Rules for investing in the stock market.
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However, there is no clearly specified formula to success, but these rules will ensure that you have a high probability of booking profits in the long term.
1.Set Reasonable Goals:
Remember your days of going to the gym as a beginner, when you knew nothing about workouts, nutrition, exercises and your body. You just perform some exercises just because your seniors were doing or your Gym partner recommended, you had no goals of achieving a particular body structure. This is a strategy that can backfire big time when it comes to investing in stocks. do not buy stock under someone else’s influence or because a lot of other people are doing so.
First, write down your goals, for instance, for how long you want to invest, how much money you want to invest, which company you want to invest in and so on. Then do your own research and invest. Therefore conducting both fundamental and technical analysis are important before choosing to invest in stock
2. Prioritise the Long Term:
Privatizing long term investment is Buffett’s one of the key principles of investing in stocks. Long-term investment is considered to possess more potential than short-term investment. But it requires patients and consistency while investing your money. So do not invest for a short period of time making small profits, look at the big picture always.
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3. Never Succumb To Herd Mentality:
The typical decisions are generally heavily influenced by the actions of their acquaintances, neighbors or relatives. Thus, if everybody around is investing in a particular stock, the tendency for potential investors is
to do the same. But this strategy is bound to backfire in the future. Warren Buffet has stated “Be fearful when others are greedy, be greedy when others are fearful.”
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4. Diversify:
As you are already over the stock market does carry its own risk. Why should always diversify the investment across different types of acids to mitigate risks. One should not keep all apples in a single. Level of diversification depends on each investors’ risk taking capacity.
5. Complete Your Homework:
You may have heard many successful investors saying that proper research should always be performed before investing in stocks. But that is rarely done. Investors usually go by the name of a company. This is, however, not the right way of putting one’s money into the stock market. A proper research is a way of generating optimum returns from your investment. So always make sure of doing your own complete research before choosing the stocks in the market.
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6. Constantly Monitor Your Portfolio:
We are living in a world where any important event happening in any corner of the world has an impact on our financial markets. Hence, we need to constantly monitor our portfolio sleep and keep doing the desired changes in it. If you cannot review your portfolio due to lack of knowledge or time constraint, then you must
take the help of a good financial planner or someone who is capable of doing that.
7. Do Not Allow Your Emotions to Take Control of You:
In the 7 Golden Rules for investing in the stock market. Many investors have been losing their money in the stock market due to the inability to control emotions, particularly fear and greed. Greed increases when investors hear stories of fabulous returns being made in the stock market in a short period of time. This leads them to speculate, buy shares of unknown companies without even understanding the risks involved.
8.Invest In Businesses You Understand :
Never invest in a stock if you are Investing for long-term, invest in a business instead. And invest in a business you understand very well. In brief, before investing in a company you should know what business the company is doing.
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The Pros and Cons of 7 Golden Rules for investing in the stock market.Is It Worth It:
If you are investing in stock market doesn’t mean its a win win situation for you. All the people who invested in stock market or any expert who are the pro of investing in stocks, they always says investing in stock market are full of ups and down. So here in this article 7 Golden Rules for investing in the stock market. we are going to discuss the pros and cons of stock market.
Advantages of Investing in the Stock Market:
Potential for High Returns:
Investing in stock market is a far better option then investing in your traditional investing option where your parents use to invest their money in FD,SAVINGS ACCOUNT or any type of bond which gives you 6-7% approximate profit in an year.
But you can earn more than 6-7% profit in an year in stock market. If you want to invest in stock market for the long time you can see your money become much more then you invested in your past. Because stock market is based on compound interest.
Diversification:
Before investing in stocks you have to learn how the stock market run.So if you want to invest in stocks make sure you have to diversify your portfolio. because its gives you the confidence to continue your portfolio. If any stokes does any wrong behave you can easily withdraw your money and invest in another stocks which behave nicely.
Liquidity:
Investing in stock market will give you the freedom of liquidity. Yes my friend its give you the confidence to liquefy your money. If you any stocks give the unexpected result which you want from your stocks, then you can easily cash in your liquid money from that stock. which you don’t do in traditional investing.
Disadvantages of Investing in the Stock Market
Risk:
Risk is the biggest problem to investing in stock market. That’s why lots of people don’t want to invest in stock market because they are afraid to loosing their money. Stock market is totaly dependent on how the market behave. So in terms of risk we thaught its its a 70(safe)-30(risk) rule that works for every one.
Volatility:
Volatility is the one of the biggest concerns in terms of investing in 7 Golden Rules for investing in the stock market. because the market is full if surprises. If the market is good you can see you portfolio gives you the growth but the moment you see the market become down or suddenly lock down, or war happens something like that you can see your portfolio has become impact due to that reason.
Time:
Lots of time are going to invest from you. You need lot of energy too. Yes my friend, to become a smart investor you have to do lots of research before doing invest in stock market. you have to pick some stock and do lost of research about that particular company like when the company forms, how does company do their business, what is the past 10 years experience of that company like that.
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Conclusion
So basically this post is all about 7 Golden Rules for investing in the stock market. In this post we are discuss about how we can make a big difference with a small amount of investment. In this article we also discuss about how you can plan for your future with an amount of money that you can use for the snacks with your friends.
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