10 Things To Know Before You Start Investing In Financial Markets

The financial market may prove a very lucrative platform to invest your money and earn a passive income. At the same time, it can prove intimidating for the first time investors to dive in and avoid “rookie mistakes”.

Here are 10 things which will guide you as a beginner investor in the stock market.

Amount To Be Invested

You may be wondering how much capital you should invest in the stock market. First and foremost, you should invest the money which you can afford to lose. Starting with 5% of your net income is enough until you gain confidence

Not Get Quick Rich Scheme

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Remember you are not there to become a billionaire overnight, invest cautiously. Approach the market in a patient way so that you can be there for a longer period of time and also stay there victoriously. Patience is the key

Fundamentals Of The Company

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Always understand that your money is backed by strong fundamentals of the company. For example, an FMCG product is backed by the quality of the food product and also by the wide acceptance too.

Diversification Of Funds

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Don’t limit your capital in one equity, diversify your funds into many other categories such as finance, commodities etc. Also stay away from over-diversification, if done it would lead to confusion.

Do Not Take Decisions As A Trader

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Remember your stance as an investor, if you have set a goal, achieve it, don’t run behind short-term goals and be happy. Achieve what you have set, if it is a SMART goal.

Set A Target

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Always set a target for a said equity and don’t get emotionally attached to it. For example, if you have set your target to 50%, stand by your target even if you believe the return would be 70%.

Financial Intelligence

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Always acquaint yourself with news, market trends and basics of the financial market, so that you don’t get left behind and behave naively. Financial intelligence could be gained throughout life-time by YouTube videos, some eminent speakers and many other sources

SIP

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Systematic Investment Plan (SIP) is a lesser-risk approach to financial markets. As the name suggests, you deploy your money systematically in the market that ultimately mitigates the risk.

Do Not Copy

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Copying has never helped anyone if you don’t know the art, so it will not help you any way with investments. The unpredictability of the financial market can be won only by your predictions alone. Suggestions are always welcome but don’t be in the herd mentality at the cost of your money

Calculative Risk

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Risk does not feel like a risk if it’s calculative. Keeping in mind all the above-mentioned points will help you to make calculated decisions. Avoid unnecessary leveraging.

All these points will help your long run in the upcoming investments.

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