The stock market is an interesting investment opportunity, to make a lot of money. People all over the world are turning their lives around, and living off the stock market. However, there are also people losing everything in the stock market. To end up successful, rather than not, you need to be patient. The secret to success is consistency. Making 1 huge profit, and hundreds of smaller losses will take you back to square one. Be prepared to put in work, day in and day out, to become a successful investor.
Don’t invest blindly
One of the worst mistakes that beginners make is investing blindly. Whether they got the advice from a colleague or a friend, they blindly trust the guidance.
This can be a major problem, as this is essentially gambling. You need to do your own due diligence, and make sure that you know the company that you are investing in.
Important things to look for when investing are the company’s track record, and if it’s the right time to invest in that company. You should dip your toes into the water only once you have learnt the basics of investing, and analysed the stock that you want to invest in.
Don’t expect huge returns, initially
Let’s face it, the stock market is not an instant money-making scheme. As an investor, you need to understand that making money consistently requires substantial knowledge of the market.
As the world changes, you need to adapt to it to repeatedly make profits. Some of the biggest investors, like Warren Buffet, made their millions after a long time! The key is consistency. Stay patient and set a goal for yourself.
Try your best to reach that goal, however large it might be! Don’t expect instant results.
Learn the basics
This is arguably the most important piece of advice.
Without knowing the basics of investing along with the jargon (terminologies), you won’t understand why you are going wrong. Sometimes you might get lucky, and make some money.
Unfortunately, this won’t happen 90% of the time if you are just guessing. Investing requires you to have an understanding of the market and what causes companies to do well. You then have to notice the rising stocks and buy them.
Invest only your extra cash
While investing, you can lose all your money! This is why it’s extremely important that you have enough money to live for a few months at least before you put anything into the stock market.
However well you research and analyze a stock, there is always a chance of everything going wrong. If you can’t afford to lose that money, don’t invest it!
Don’t invest using borrowed funds
When you lose your money, it’s okay as long as you have a backup and learn something from that experience.
If you lose someone else’s money you have a problem on your hands. Now, you are answerable to them as well.
If you borrow from a bank, you have to pay interest. If you lose the initial amount, it would be bad, but now you have to pay interest as well
Diversify your investments
Do not invest too much money in any 1 stock. Make sure your investments are spread out so that if 1 stock tanks, you are making money in other places.
That being said, don’t over diversify. If you have too many stocks, then you can’t properly keep track of your investments. Diversification also applies to your overall investment portfolio, which will include real estate, mutual funds, stocks, etc.
Know your risk appetite
Depending on your financial situation, you should analyse how much risk you are willing to take. Understand your investment goals, and assess the risk you are taking based on your financial situation.
Set aside your emotions
Do not let your emotions get in the way of your investing. Your emotions cloud your judgement.
In the stock market, investors have to be sharp and disconnect their emotions from their money.
Stick to your plan, in the event of a loss or gain!
Comment down below how your investment journey is going!
