10 Golden rules of investing

New or experienced, frequent or occasional, no matter what kind of trader you are a few golden rules of investing will help you achieve your financial goals if followed diligently. These rules are:

• Rule 1: Keep yourself abreast of the main global and domestic market developments to get an idea of where our economy is heading.
• Rule 2: Be updated of risk/reward associated with making investment in particular asset class or classes and decide on your risk appetite.
• Rule 3:Buy stocks boasting of consistent and predictable earnings growth that have potential of generating returns beating inflation.
• Rule 4: Diversify across asset classes to reduce the likely ill-impact of adverse market movements as all the asset class do not perform in similar fashion at a given period of time.
• Rule 5: Invest in stocks/companies which participate in India’s growth story.
• Rule 6: Review investment decisions periodically, enabling to come out of non-performing assets and invest into performing assets.
• Rule 7: Use period of extreme optimism to exit and extreme pessimism to buy stocks.
• Rule 8: Make exit an independent decision which should not be driven by profit and loss considerations.
• Rule 9: Choose good investment stocks and avoid investment in penny and unlisted stocks.
• Rule 10:Stop loss though a foe is essential to minimize risk, hence, always opt for it while trading/investing.