Investing in stock market requires a lot of home-work especially if you are starting out as a beginner. From knowing the basics to getting onto the strategies involved in trading, there are several steps involved when it comes to investing wisely and safely. Here in this article, we have highlighted few important pointers that seasoned investors commonly advise new traders before they open their demat account with any leading stock brokers, Zerodha, ICICI Direct or Angel broking and start trading in the volatile Indian share market
How well informed you are?
Before investing you must know how the stock market functions, what are the types and what ae the ways in which you can diversify your capital. Nevertheless, the Stock Exchange is a huge financial market and there are several ways to capitalize your principal amount. Interestingly, you can either invest directly or do it through an investment fund. So, before you put your foot in, you must analyze what type of product you want to invest – In a product or in an investment fund? With a fixed or variable return?
Do you know the risk?
You have to take into account the risk you can tolerate with the money you are putting in the market. Knowing the volatility and unpredictability of any stock, it is important to cut out any unnecessary risks, and invest only that which you would not need in the short term. Risking your savings and hard-earned money in share market is something that is not advisable. Always invest a percentage of your earnings so that you are well-off even without that money.
Understand the strategy
Taking into account everything discussed so far, it is very important that you build your investment strategy. That is, be clear about your goals, products, time, your level of diversification, etc. Not all investors are equal nor are all investment objectives. In addition to operate on the Stock Exchange, there are entry, purchase, sale, custody fees, etc. Not to mention that, if you have no experience, it is recommended that you either train thoroughly, or do it through experts.
The stock market is a market, after all!
Train yourself theoretically as well as practically, use savings that you do not need in the short term, be clear about the investment term, what risk you want to assimilate and always diversify your investment portfolio. Keep in mind that investing in the stock market is easy but capitalizing it and earning profits from it is a tad bit difficult. Study everything you can, inform yourself continuously, invest small amounts until you have gained more experience and last but not the least, be flexible.