When you know the rules of game, its easy to win the game. The same holds good while investing in the stock market. If you know the Do’s and Don’ts of investing, then the investing will no longer be a nightmare.
1. Come up with the strong investment plan:
Its always advisable to formulate the strong investment plan before investing. Decide the risk appetite you are ready to take up and have a proper asset allocation. Try to spread out your investments across asset classes like bonds, equities etc.
2. Diversification of the investments is must:
Avoid putting all your eggs in one basket. Try not to invest in only one sector, diversify your investments among various sectors. If you diversify your investments, the stock market volatility cannot eat up all your money. .
3. Conduct the market research of the stock:
Don’t take a blind shot on any stock. Even if you get the tip about some shares, do your own analysis about that share, before investing your hard earned money in that particular stock.
4. Follow your Rules:
Each and every investor will be having their own set of rules. Follow your rules. If you have decided that you will allocate only 40% of your investments in equity, then stick to it. Don’t exceed it even if the stock market delivers great returns.
5. Don’t allow your investments to be driven by emotions:
Since the stock market is volatile, you will see the fluctuations in the price of the stock which you are holding. So don’t panic when the price of your shares come down, take a rational decision. At the same time, when the price of the shares go up, don’t get greedy.
6. Don’t blindly follow the “Talking heads”
It so happens that we blindly follow, what experts say on tv. We have to bear one thing in mind, no one can predict the stock market. So, don’t just follow, what experts say, conduct your independent research before making investment.
7. Don’t take a guess:
It’s the most important rule. Don’t take a guess on a particular stock. Don’t buy a stock just because its price has been rising, at the same time, don’t sell if price starts falling. See the performance of the stock over bull and bear markets and then make your choice.
8. Don’t junk your stock portfolio:
Don’t buy too many stocks. Your stock portfolio should not have more than 12 stocks.
If you are interested in investing in stock market , but if you have very less idea about it, consult stock advisory company. First decide the type of trading you want to do. Whether its Intraday trading or are you going enter the futures and options. If you decide to do Intraday trading, they will give Intraday tips through which you can earn profits