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How often people get confused about just where to start with investment? Well, quite often and they are bound to be in that situation given that there are ample number of opportunities available for investment. However, one can always follow certain rules so as to not fall as a victim of investment going wrong. Here are few things that you should always keep in mind before investing:
Don’t go with the crowd always: When a person plans to become an investor, he definitely seeks a bit of guidance from those who have already been in this business for quite some time. However, one must always go ahead with what suits their risk profile as it differs from investor to investor. Each person has their own preferences and goals and so it’s foolish to follow what everyone is doing just for the sake of doing it.
Do your research for Investment: Before investing, do a thorough research about the company in which you are keen on investing. This will help you in knowing whether you are heading in for a huge profit or a minimal profit or loss and then you can make your decision wisely.
Understand and then invest: People often hear about stock prices of certain companies doing well, do a bit of research and then invest in order to gain. That is a wrong practice. You must always choose to invest in the type of business that you understand well. It is so because then you’ll know when exactly you can make profits and where you’ll head for losses and can be prepared in advanced for the same.
Don’t time the stock market in India: Many people who have been in investing business for quite some time might think that they’ve understood it all and try to time the market in order to gain profit. This might work luckily for them sometimes but one must never be under the delusion that it’ll work always. If you are under that thought, then you’ll end up loosing more than you’ll ever gain. Read :Best time to invest in the mutual funds
Be consistent in Investment journey: Every investor must understand that volatility is the basic nature of stock market. So, you are allowed to panic a bit when market goes down but don’t take rash decisions in the heat of the moment. Be patient and consistent with your approach towards investment for the longer you hold onto your investment, the better profit you’ll be able to earn. However, in case you are incurring losses consistently, then you are free to exit that fund.
Don’t be fueled by emotions: Investment should be done with your head and not your heart. Also, in case you’ve started making good profits, don’t let it get to your head. Keep your greed in check and keep on investing just like before. Greed has never done any good to anyone.
Diversified investment portfolioHaving different types of funds in your portfolio will help in broadening your horizons as well as will balance your portfolio too in case you loose in one of the funds invested.
No unrealistic expectations from Investments: Your expectations must always be in line with the investments made. Don’t go overboard with your expectations as it will only leave you disappointed. Know what your investment can offer you at max, hope for the best but have lesser expectations than that.
Take risk as per your affordability: Since there’s no gain without taking a bit of risk in stock market, do it with the funds that you have in surplus amount. That is you can afford to loose that amount though it’s not necessary that you’ll loose it. But still, the losses won’t hit you as bad as it would with any other fund. Many people just see the bright side of the leverage but they forget the dark side of the leverage
Leverage multiplies your mistakes -Warren Buffet
Always keep a check: Stock markets are volatile in nature and that is why you need to keep a check on how your investments are doing in the market. Especially in case of equity funds. You may never know when you will hit the jackpot if you don’t keep checking.
These are few pointers that will help you in choosing the direction for your investment. Rest, people generally learn with time as they go on investing.