Share Market Tips
Different investors enter the share market with different investment goals. Some expect quick and high returns and some long for long-term investments and a strong balanced portfolio. However, every investor should follow a few share market tips during the investment journey for protection against volatility.
Here’s a list of best share market tips we recommend:
- Set goals
- Understand Risk Tolerance
- Pick the correct stocks
- Control emotions
- Understand basics
- Diversify investments
Share Market Tip: Set Goals
One of the best share market investment tips is to invest with goals. Before commencing any investment, linking it to a short-term or long-term goal is highly recommended. This gives better clarity about the duration of investment, the target amount, etc. If you are likely to require the investment returns in a short duration, you can consider other tools of investment. However, if you have a longer period of investment, investing in equity could reap you the best returns.
Share Market Tip: Understand Risk Tolerance
Considering the volatility of the share market, it is advisable to first understand your risk tolerance for any investment. Risk tolerance is an important part of the investment journey and varies from investor to investor. It essentially is the ability to bear the swings of the market and its effects on the value of the investment. The low-risk tolerance of an investor depends either on the appetite for loss or the ability to bear the anxiety during highly fluctuating market. Investors with low risk often tend to panic sell their securities at the wrong time.
Share Market Tip: Pick the right stocks
One should avoid investing in penny stocks and in any stocks based on word of mouth. Rather one should invest in stocks based on research and strong company performance. Another added benefit of this share market tip is that companies with strong performance can better withstand the market fluctuations and gives stronger chances of the better returns on investments in the long run.
Share Market Tip: Control Emotions
One of the biggest obstacles on the path of share market investment is the investors’ inability to control emotions while deciding. The overall market performance and prices of the companies reflect the emotions of the investors in the short-term. This also often caused the herd mentality, where the investor’s decision is highly influenced by the actions of other investors, rather than logically analyzing the situation to decide. Experts recommend investing in a stock when you have reasons to expect the stock to perform better in the future and to ensure a target to exit the investment. In other words, a buying and selling strategy is one of the most import share market tips.
Share Market Tip: Understand the basics
Before investing in any investment tool, taking time to understand its basics is very important. Generally, investors avoid the understanding the basics of the stock market, its function and strategies or avoid reading the research reports or performance reports of companies before investing in them, as it involves complex number language and technical terminologies. However, investors fail to understand that the onetime effort put in understanding the terminologies and strategies once can help in making wise and informed decisions, resulting in better returns.
Share Market Tip: Diversify investments
While all investors take utmost care to diversify investments in different investment tools and maintain a well-balanced portfolio, investors often overlook the importance of diversifying the equity investments. Diversifying equity investment implies investing across different sectors and industries. A diversified portfolio can better manage the impact of a swing as often a downtrend of one sector causes an uptrend for another.
- Always prefer SEBI and Stock exchange registered market intermediaries
- Ensure clear communication with your agent, broker or intermediary.
- Read all documents carefully before investing.
- Check the company’s credentials, management, and other vital information before placing orders.
- Be cautious of stocks showing rapid ups and downs.
- Make investment decisions with proper research and analysis.
- Don’t deal with non-registered brokers, sub-brokers intermediaries.
- Don’t blindly follow the herd mentality, media reports or speculations.
- Don’t sign/submit any documents without fully understanding its terms and conditions clearly.
- Don’t imitate investment decisions.
- Don’t invest according to emotions.
- Don’t wait and time market.