RULES ON INVESTMENT IN STOCK MARKETS

It is not easy to make money in equity. You need to be financially disciplined, patient, studious and understanding of the market. The market can be so volatile to the point of leaving you thinking of whether to sell out your investment or to hold. However, here are the basic rules that would guide you to success.

1 Avoid the herd mentality
2 Take informed decision
3 Invest in business you understand
4 Don't try to time the market
5 Follow a disciplined investment approach
6 Do not let emotions cloud your judgement
7 Create a broad portfolio
8 Have realistic expectations
9 Invest only your surplus funds
10 Monitor rigorously

IN DETAILS

1 AVOID THE HERD MENTALITY

Most entrepreneurs have their decisions influenced by the actions of fellow entrepreneurs in the industry. You'll see an entrepreneur investing in a stock because his fellow entrepreneurs have invested. This in the long run would turn out to be a wasteful investment because too many persons have indicated interest, thus bringing down the prices of the products in the stock market.

However, be careful when others are becoming greedy about certain investment, and be greedy when they're afraid of a particular investment.

2 TAKE INFORMED DECISION

To invest in a stock market, there should be a thorough and consistent study of such investment. Let your decision proceeds from a well researched analysis of the market. Do not invest based on the brand involved or the number of investors involved.

3 INVEST IN BUSINESS YOU UNDERSTAND

Making investment in businesses you don't have knowledge of is risky. Make proper research about any business before going in it for investment. Perhaps, study to know how the business has been going and the challenges it has faced before making a decision to join.

4 DON'T TRY TO TIME THE MARKET

Timing the stock market can lead to you losing your hard earned money. Instead, have a strong view on the price level that is appropriate for shares by investors.

5 FOLLOW A DISCIPLINED INVESTMENT APPROACH

Panicking too much when investing would lead to lost of investment. Be patient and follow the right approach to investing in the stock of your choice. Investment in the right share and holding on patiently is a key to enjoying a huge return in investment.

6 DO NOT LET EMOTIONS CLOUD YOUR JUDGEMENT

When emotions are expressed in investment, an investor can lose his hard earned money. Ensure that you control your emotions, your fears and greed. Rushing in to make quick money can ruin an investor. Do not buy shares from the company you do not know. Do not fear to buy or sell when you shouldn't, and do not be greedy to buy or sell when you should not.

7 CREATE A BROAD PORTFOLIO

This guarantees minimum risk, but optimum returns in investment. Diversify your portfolio across various assets. This would ensure that you are on the safe side in cases of down time on any investment.

8 HAVE REALISTIC EXPECTATIONS

Hoping for the best in investment is not bad, but unrealistic assumptions in investment can lead you to lost of your hard earned money. Invest only the amount you can safely let go in cases of low returns.

9 INVEST ONLY YOUR SURPLUS FUNDS

Taking risk is good and at most times hugely rewarding, but be cautious to invest only the amount you can safely lose. Invest your spare cash in volatile markets for safety. No one is sure of good returns when it comes to volatile market.

10 MONITOR RIGOROUSLY

To monitor your portfolio is to guard your investment against potential lose. If you're not able to carry out this on your own, the involve the service of an expert. To invest in stock market, you must be ready to monitor your investment timely.

REFERECE:

Economic Times