Stock Market For Beginners
If you want to take any share for investment purpose, then you should analyze a lot of points for that and only then make your decision whether you should invest money in this company or not.
It is better to do research on your behalf than to trust someone or blindly trust a company. Do your analysis about that stock and only then invest your money
Before buying a stock, you should also confirm that this stock is right for you. If you have taken a recommendation from someone then maybe that stock is right for him but it is not necessary that it is right for you.
Because after purchasing that stock, you become not only the shareholder of that company but also the owner of that company.
If you are a beginner then what are the points you should see before investing your money in any company, Stock Market For Beginners
What Is Your Goal
First of all you should know your goal because every individual is different and everyone has different goals. Before knowing how the Indian stock market works, you must know your goal.
For how long do you want to invest and for how long do you want to stay invested in that company? There are some people whose investment period is very short, they want to invest only for one year.
Some people want to invest for the medium term for five-seven years and there are some people who want to invest for a long time i.e. for more than 10 years they want to keep their money invested in the stock market.
And you must have heard more people saying that if you want to make money in the Indian stock market, then you will have to keep investing money for a very long time and after that you will get to see the result automatically, then you should not invest. First you must know your investment goal. Stock Market For Beginners
volatility & risk
If you invest your money in the stock market and think that only you are going to profit from here then this approach is a bit wrong.
Now whenever you invest your money in the stock market, you have to keep in mind that there is definitely some small risk somewhere.
You have to analyze your risk and keep in mind your investment good, invest in that stock in the same manner as you want to take the risk.
Meaning some stocks are very volatile i.e. if you look at the same stock on a bullish day, it gives you a return of 15 to 20 percent in a day.
And on Bearer’s Day, you get so low that you will not even be able to exit it, even if it is in your portfolio, that’s why you should avoid such stocks.
If you have the ability to take risk then you can also invest your money in volatile stocks. If you want to take less risk then you should invest money in low-volatile stocks Stock Market For Beginners
Diversify and not
Now see, there is no such thumb rule that you need to diversify your investment. There is a simple logic that your portfolio should be well balanced and well diversified.
Now what does diversify mean, your money should not be invested in any particular one or two sectors. Whatever your portfolio is, there should be at least six to seven sectors in which to invest your money. If you want to do more, you can do more.
But you do not have to invest the entire money in one or two particular sectors, because if for any reason those particular one or two sectors are not running.
That is, if good returns are not being seen in those two sectors or if negative returns are being seen, then your portfolio may have a bad effect,
But if your portfolio is diversified, you will be investing in different sectors. Even if one or two sectors do not perform, the rest of the sectors will perform well. For that reason your balance in the portfolio will remain good,
OWN Research
No matter how many people you see making money from the stock market, but do not blindly follow anyone. You have to do your research. Anyone can give you any recommendations.
You do not follow blind, you have to study from your side. Invest your money only after doing thorough research of the stock. Stock Market For Beginners
Company Management
Now before investing your money in any company, you have to know about its management. If there are some people sitting in the management whose reputation is not good, then do not waste your money by investing in that company.
You have to find out who are the people sitting in the management, how is their reputation in the market. If there are people with good reputation, then invest money there. Do not invest money in a company with bad reputation.
Stock Performance
Now if you are investing in the stock of any company, then you have to see its past performance. Along with this, you have to see the past performance of other shares of its SAME category and find out whether this stock is performing well in their comparison or not,
It has come to know that the same stock has not performed well for the last few years or for a long time and even if you invest money in the same stock, it may not perform well in the coming time, so you See also past performance
And at the same time what kind of returns are the competitors giving. If its competitors are giving good returns then you should invest in them.
Share Holding Pattern
Before investing your money in any company, you have to check the hundred percent equity of that company, who has it, where is it. The more equity the promoter has, the better it is for that company. Stock Market For Beginners
Because that promoter has invested more than you, then the promoter will also want the company to perform well so that its wealth can be maximum.
If you have also invested, then your wealth will also be created with that. After the holding of the promoter comes the general public key investment i.e.
how much the mutual fund houses have invested in it and after that if the foreign investors and domestic institutional investors together have held a lot of portion, then that stock will definitely be good.
That is why these people have invested, so you can take your decision on the basis of that too. Stock Market For Beginners
Company Size
Now see, the smaller the company, the more the risk will be inside it, but the chances of growth will also be higher because the small company can boost it immediately if it ever gets a big project.
If there is any small damage to it, then it can also dip at once. But at the same time, the big company did not effect by such type of small news, So you have to consider this point also, if you want to take more risk then you can invest your money in small company. Stock Market For Beginners
Same if you want to invest in low risk then you should invest money in big company.
Dividend History
There are some strokes which divide some portion of the profit to their investor and pay out as dividend. Now if you want to invest on the basis of regular income.
If you want to invest in any company and keep earning regular income from there. If you do not want to sell the stock, then you can invest in a company with dividend payout. Invest your money in a company that offers high dividend payouts and
if you want Just keep your money invested, if you want to create long wealth, then you can invest money in a company without dividend or if you want to invest in a dividend company, then the dividend payout you get, you can invest it again.