Things to know before Diving into Share Market

If you are thinking of investments that could beat inflation and also give you good returns, one option might be to start investing in the stock market. If you have decided to do the same and go for it all by yourself, it’s not a bad idea. The stock market, when properly understood, can help you make a lot of money, but you can also lose all your money if you are tempted to invest randomly without knowing the nitty-gritty of the market.
Therefore, there are a few things you must know before you dive into the share market. Here they go:

  • Never jump blindly into stock markets
  • Stock market is not a money-making machine
  • Educate yourself, handle basics first
  • Invest only your surplus funds
  • Avoid Leverage
  • Avoid herd mentality
  • Diversify but refrain from over-diversification
  • Don’t try to time the market, follow a disciplined investment approach
  • Don’t let emotions impact your investment
  • Have realistic expectations
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The choice and final decision to pick the right investment among the plentiful options is largely dependent on the possible exposures to risk, expectancies of a definitive return, availability of funds, sources of income, liquidity of the investment instrument and the time period for which the investment is being made. Traditional investors do consider such factors before taking their final call to invest in a stock, fund or any other tradable security. The conventional form of investing doesn’t differentiate on the nature of business, the vision of the enterprise and the short-term goals and objectives of a firm.To understand how to invest, one must know where he/she can invest, as different investment strategies involve different methods of investing.

Hi Tarun,

Very good info suggested for beginners of share marketing investment. It’s a clear explanation of what are the steps we know before invest in the share market.

The share market is a challenging and interesting platform to earn high returns. Here are a few things you need to know before you dive into the share market:
  1. Acquire basic knowledge - It is important to know how the stock market works, how the company stock prices change, and how political and economic factors influence the market. It will help you make proactive and smart decisions.

  2. Decide on your risk tolerance levels - Stock market volatility is common and has an inherent risk. So, before you invest, understand how much money you can afford to lose and the extent of risk you can take.

  3. Diversify your portfolio - After gaining a good amount of knowledge, you have to decide on your portfolio. It will be based on the amount of money you are planning to invest. When you build your portfolio, try to diversify it by purchasing stocks from different sectors. It will help you from making excessive losses if a particular sector falls due to some reason.

  4. Keep yourself updated with the News - The stock market varies based on world developments. Keep yourself updated with the happenings in the global world to understand how it can affect the stock prices to make well-informed decisions.

  5. Stay focused - As the stock market keeps witnessing fluctuations in price, you should stay calm and stay strong mentally to boldly overcome the risks. Have realistic expectations and stay focused to achieve them.