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While looking for the best way to increase the money you have saved, what’s the primary idea that seems the best? A bank account? Maybe not! Bank savings just produce fixed interest payments. Since there’s very little risk involved, the profit is likewise less. It is a good option if you need your money stored securely and need easy access to it, but you don’t end up increasing it substantially.
Investing in the stock market, however, may enable you to create a pool of reserve funds which is much more substantial. Shares/stocks are a piece of the share capital of an organisation that is owned by the investors – these shares can be traded in the stock market. You can trade both stocks and bonds on the market but investing in the stock market is the simpler and more straightforward alternative.
Does an advisor play a pivotal role?
The stock market is an exceptionally complicated world, and it is hard to predict the movement of shares, stocks, economic indicators, sectors, industries, and companies. If you want to begin investing you will need to focus intensely on learning and analysis.
If you want to start investing in stocks without prior knowledge and planning, going through an advisor is ideal. Find a legitimate advisor, and open your Demat account. This will give you access to the market, where you can start trading.
Is stock trading done by intuition?
Many new-time investors tend to approach the market from a speculator’s perspective. They invest in a stock that feels right because their instinct indicates it is. No one can, of course, predict exactly what the future holds, and you can’t foresee the fluctuation of stocks without doing serious research. You might end up being lucky once or twice, but that luck will run out sooner or later.
Your instincts will tell you that the best time to buy a stock is right after it’s value has dropped, but you have to understand that somebody is also selling the stock. Keep in mind that if the value is declining, there’s a reason behind it. Stocks as a rule respond to the general market climate, so you must know that element consistently.
Plus, it is difficult to know exactly what is going on within an organisation you choose to invest in. You can’t know about every single inner element. Be that as it may, you actually need to follow the latest news from credible platforms to get a sense of which way the winds are blowing.
What factors should be considered before investing?
- The first step in making a fruitful investment is to understand your financial goals and objectives. Understand that the money you put in, is for the long term, and you will not have the option to pull it out soon. Also, there is no assurance that you will make money through your investment.
- Not every person is happy taking on high risks for extra earnings. It is recommended that investors evaluate their risk appetite to guarantee that the investment made in stocks is in line with their financial objectives.
- Spread your investments across multiple sectors or asset classes to minimise risks. You must strategize your asset allocation by factoring in your time horizon, risk appetite and investment goals. You can save yourself the trouble of starting from scratch and compensate for one loss with profits from another.
Stock investment decisions are not to be taken on a whim. For a beginner, that’s the most important thing to understand. Another common misconception is that investing in the stock market is a gamble. It really isn’t. It works on specific principles that require strategic thinking and deep analysis.
As always, we suggest you consult your financial advisor before making any financial decisions.
