Want to get rich by investing in stock market? Former BSE chairman shares key points to consider

Stock market funding ideas. Representational picture

Investing in stock is all the time a problem, as many components come into play earlier than deciding which stock to make investments on. Some of the vital components to consider earlier than investing into shares are:

  • The most vital side is the funding urge for food based mostly on their earnings and what a part of their money they’re prepared to preserve apart to make investments on shares.
  • One’s means in taking monetary dangers and choices.
  • Investor should have a good data concerning the stock market and may analysis and preserve a observe of the listed corporations earlier than getting to make investments on it.
  • The funding must be made after a whole research of the consumers and sellers in the market. At each value there may be purchaser and a vendor. So the provision of purchaser and vendor is essential because it ensures liquidity.
  • Investor can select to have a brief time period or long run perspective, it relies on how mature or much less mature you need your stock to get. Most possible for stock to transfer up, it takes time.
  • Investing with borrowed money generally is a dangerous observe. The individuals who borrow money from extremely leveraged traders usually find yourself on the shedding facet due to the shortcoming to face up to the fluctuations of the market and the strain to pay again the borrowed sum.
  • One ought to abstain from investing in penny stock as most traders don’t get the worth of funding and likewise at occasions can not exit after they want to. So the very best observe is to make investments in essentially sound corporations with good educated promoter and the one making first rate earnings.
  • Investors profile is the key: As some are lively and others are passive.
  • Passive and long run traders should additionally periodically evaluation their portfolio.
  • Timing of the funding
  • Knowing when to exit or promote
  • Not to be speculative and make investments in liquid shares.
  • If in case, the funding is finished by way of brokers, correct diligence of middleman is a should. And if the funding is made on foundation of a suggestion then it’s crucial to validate it, as there are numerous who would advocate dumping the stock.
  • The investor should mitigate/scale back their threat by investing in as many shares as doable as a substitute of selecting up a couple of.
  • Concentration threat can lead to losses relying on which sector or trade they belong to or what the government. insurance policies are in that sector
  • One should totally dedicate time to this exercise if one needs to be an lively investor.
  • Those who’re passive and can’t dedicate a lot time can make investments by means of mutual funds. As after the Franklin Templeton fiasco it’s important to consider the scheme and the fund home in which one wants to make investments in
  • Investment has a direct correlation with reward and threat. It is essential that traders should consider the chance and rewards equally from their very own funds and talent to take threat accordingly.
  • A brand new investor should do shadow / dummy funding to improve their data of market and the corporate.
  • It is finest to keep away from speculative trades and investor must be ready to keep invested in stock for medium or long run as most the shares require time to mature or to give good return

(By S Ravi, Former Chairman of Bombay Stock Exchange, Managing Partner Ravi Rajan & Co)

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