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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.