• Thursday, March 28, 2024

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Best Share Market tips for beginners

By: Eastern Eye Staff

Stock Investmentoffers immense opportunities for wealth creation. Patience is the key to long term wealth creation. Beginners need to understand that the Stock Market is not a gaming house where one tries their luck. It is a serious business where capital gets committed to the purpose of earning returns.

Informed decisions based on data and research are key to being a successfulinvestor or trader. Understand the rules of the game. Be well informed about the rules of the Share Market live before plunging into the arena. Most importantly, start early, continue consistently, and have a long-term view.

Other guidelines for Stock Market beginners are:

  • Luck short-lived

Understand that luck lasts till your capital lasts. Over-dependence on luck can be fatal. Upgrade and constantly update so that the dependence is more on data and research thanon chance.

  • Long-Term Investor

Consider this and avoid short term trading. Drop the idea of making quick money.

  • Companies with historic performances

Such companies havesound management. Some homework is required in shortlisting them. Until you acquire the requisite stock-picking skills, invest in Large-Cap companies. They are in the top 100 companies ranked by market capitalisation.

  • Have a plan

Before investing, know the purpose behind buying a stock. The reasons for finding a stock attractive should be spelt out. Emotions should get relegated, and objectivity needs to come to the forefront. Similarly, the reasons for exiting a stock should also be clear.

  • Build a portfolio

After shortlisting, create a portfolio of companies you would like toinvest in.

  • Begin small and build on

Decide the capital that you can commit. Be consistent. Invest by making a systematic investment in companies to benefit from the cyclicality of the company. Also, do not buy all at one go. Buy in tranches to avoid wild price movements. Keep some liquid cash handy for contingencies andinvest only the surplus.

  • Avoid placing all eggs in a basket

Diversify your investments across sectors. Initially, focus on Large-Cap Stocks, and once you get a grip on analysing companies, invest in Mid-Cap and Small-Cap companies.Also, diversify by investing in other asset classes listed in the Share Market live likeExchange-Traded Funds, Mutual Funds, and Fixed-Rate Instruments like Bonds.

  • Due diligence

Do not go by market rumours or hearsays and unsolicited recommendations. Invest your time in research and decide and monitor your investments regularly.

  • Avoid leverage

Leveraging means using borrowed funds for investment. Invest small but do not do so by borrowing. It results in huge losses if your investment moves against you.

  • Avoid constant monitoring

Monitor your portfolio frequently, like monthly or quarterly. Do not monitor closely as you may become a victim of short-term price fluctuations and exit your positions early, thereby losing out on the bigger opportunities.

  • Prepare for losses

Investments do not move upwards always. There are times it moves down sharply and causeslosses. It also tests your patience by remaining sideways for a very long period. So, keep your cool during such times and avoid panic selling. Temporary falls are great opportunities for investing. Have ample conviction in your research and studies to capitalise on such opportunities.

  • Read

Studying is an essential aspect of investments. You gain plenty of insights into the various investment styles of the professionals. Either adopt these or develop yours. Read through the Share Market live for this purpose.

The success of a beginner depends on discipline, dedication, and homework. Willingness to learnand upgrade is necessary. Before investing in Stock Markets, invest in knowledge.

Disclaimer – ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. – ICICI Venture House, AppasahebMarathe Marg, Prabhadevi, Mumbai – 400 025, India, Tel No : 022 – 6807 7100. The contents herein above shall not be considered as an invitation or persuasion to trade or invest.  I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. The contents herein above are solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments or any other product. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein mentioned are solely for informational and educational purpose.

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