Investors and general people are always on an outlook for quick and easy money which leads to riches and happiness. It is embedded in human nature to be constantly in search of some hidden keys to a treasure or winning a lottery ticket.
To make their dreams come true people buy lottery tickets or put money in those stocks which give unexpected high returns. Even it is a luck game and everybody cannot be lucky all the time. Relying only on luck is a foolish or desperate investment strategy to follow. In search for the success people often overlook the most powerful tool available that is time and compounding interest. To amass significant asset one should invest (not save) regularly, take a calculated risk, do not take an unnecessary financial risk, and let your money work harder for you over a period of time.
Few stocks will give you good returns and a few may make a loss. Here are few tips that the investor can follow to make the balance in his favor.
Purpose and time of the investment
You should first set time and the purpose for which you are investing. Ask yourself, will you be investing for six months, a year, five years or more? Secondly, are you investing for retirement, children’s college fees, purchasing a new vehicle, purchasing a new home, or build wealth for beneficiaries?
The stock market is volatile and there is no certainty that you will get the money when you need it. There are chances that your capital may not be available when you need it exactly. Hence it is always better to invest surplus money in stocks.
The growth in your stock portfolio depends upon few factors which are interdependent on each other. The capital that you invest, earning on your invested capital and time period you stay invested for.
In the perfect condition, you should start investing as soon as possible, save much as you can and invest in those stocks which give consistent returns that match with your risk tolerance.
The brokerage house gives you margin money to complete your purchase which can be nearly 50 percent of the purchase value. It is the use of borrowed money to execute your stock market strategy. The borrowed money ‘levers’ the result of price movement. If say you deal with your own money, whatever the profit or loss is yours. In case you margin money your profit or loss can double or even triple. It is not advisable to use margin money if possible avoid stock purchase on margin money unless and until you are too sure of the price movement.
Diversify your stock
It is better to diversify your share purchase which reduces the risk. You can diversify on basis of large cap, mid cap, and small capitalization companies. You can diversify according to sectors like banking, pharma, IT, mining, FMCG, etc.
If you want any tips regarding which stocks to invest in and for how long should you hold you can contact us. We perform fundamental and technical analysis and look into other factors before giving you any tip. Better still take the opportunity of a free trial by filling out the form.