As a rank beginner in the stock market, it is a wise move to not engage in any speculation and go about purchasing stocks with due diligence.
The lure of making profits in the capital market can be strong, but a move undertaken without gaining adequate financial education can prove to be costly.
Make a budget and take small steps: As means to test the waters, kickstart the journey by investing small amounts initially. Over a period of time, once your confidence is boosted, you could progress to the next level in investing.
Undertake thorough research: Before investing in company stock, gain insight into certain important aspects such as annual financial statements, ratios, management and policies. This way you could save yourself the risk of investing without adequate knowledge about the company.
Invest surplus funds only: It is after taking into account all the necessary expenses that one must consider the surplus funds to invest in the stock market. Taking into account the risks and volatility in the stock market, you should make the move to invest.
Gain financial education on the capital market: You could scour the Internet to gather information from various reliable websites. Also, certain trusted individuals impart short-term courses related to stock market investing.
Look at diversification of stock portfolio: A stock portfolio comprising at least 10-12 stocks could be ideal for providing steady returns. This way the risk exposure also is reduced in the long run. An individual needs to take into account each stock’s risk-to-return ratio. Take all such factors into account to create a well-diversified equity portfolio.
Rajiv is an independent editorial consultant for the last decade. Prior to this, he worked as a full-time journalist associated with various prominent print media houses. In his spare time, he loves to paint on canvas.