Spend, Save and Invest Smartly
Easy Money…Quick Money…Fast Money. This happens only in the stock markets. Yes, stock markets are the fastest way to make money. The returns you get from the stock market, easily beat inflation. Everybody just loves the stock markets.But what about the risk an investment in the stock market carries? An investment in the stock market is very risky. Just as you make money in the stock markets, you can also lose money in the stock markets. In a hurry to make money in the stock market, you forget the most important thing…You can lose money in the stock markets.
You read the business newspaper every day. What do you see? These 10 stocks will go up in the next few weeks. Stocks to buy for the New Year. The top 5 multibaggers you must buy.You conveniently forget to read the disclaimer at the bottom, which says these are not the views of the newspaper. The investment you are making is at your own risk.You search for hot tips from the TV, from stock market brokers, even from friends and relatives. Remember: Just as nobody knows the future, predicting the stock market movements is extremely difficult and risky. Following a hot tip without doing your research, can lead to losses in the stock market.
Investing in stocks is not like a 100 meter race. It is more like running a Marathon.You need to invest your effort and do your research, to make money in the stock market. And yes…This takes time.You have to spend time in the stock market, to make money in the stock market.
You must have watched a lot of cricket matches on TV. Which batsman or bowler do you remember the most? Isn’t it obvious? The batsman or the bowler who has performed well recently. The commentators also praise these players, as the next big thing in cricket. The Future Greats. After a string of poor performances, these players are soon forgotten. The same thing happens in stocks. A stock might have done well recently, for whatever reason and you believe this stock is the next big thing. This is the recency bias.Just because a stock has done well for 2-3 trading sessions, does not mean that it will continue to do well. Find out why the stock is doing well. Only then invest your hard earned money in the stock.Always invest your hard earned money in stocks, which have performed well over long periods of time. These stocks stand the test of time.
You love stocks which are cheap. A stock costs just INR 9-10. It’s cheap. You can buy plenty of such stocks. Imagine if an INR 10 Rupee stock, moves up to INR 20? What if you had bought a few thousand such stocks? Imagine the profit you could make.The stock prices of Companies may be low for a reason. The Company may have suffered losses in its business and this reflects in its stock price. The stock price of a Company which is performing well may be a couple of thousands. There is a better chance of the stock of a Company which has good fundamentals to double, than for this penny stock.You must buy stocks of Companies which have good fundamentals. You need to buy fundamentally sound stocks at the right price and you will make a profit in the stock market. Buying stocks to make money is never easy. You have to be extremely careful and do your research, to make money in the stock market.