Top 5 Stock Market Tips Every Beginner Should Know Investing in the stock market can be good and profitable but it can also be confusing and risky. If you are new to the market, you may get confused by words like bull market and divided market. But you need not worry. You can start your journey in the stock market with confidence with some easy tips.
We will give you 5 important tips of the stock market which every beginner should know. These tips will help you to avoid some wrong decisions and take wise decisions while starting an investment.
1.Start With the Basics – Learn Before You Invest
First of all, your job is to educate yourself. Do not enter the stock market as if someone told you that there is a lot of money in the stock market and you can easily earn money from the market. Take some time to understand how the stock market works.
Here are some things which you should learn about.
- What are stocks?
- What is difference between stocks and mutual funds?
- What is risk and how can you manage it?
- How does the market rise and fall?
- What is divided p/e ratio and market capitalisation?
If you want to learn all this, Top 5 Stock Market Tips Every Beginner Should Know you can learn from books, free YouTube videos, online courses or blogs. If you are an Indian, some of the best platforms to get started in the stock market are Groww, Zerodha Varsity and Moneycontrol.
Some tips: As you learn about the market, keep noting down new terms and concepts in a small notebook. This will help you stay organized in the stock market.
2. Set Your Financial Goals
Before investing, you should know why you want to invest in the stock market
Ask yourself
- Do I want to build wealth over time?
- I am saving for a house, a car or retirement?
- How much risk in can handle?
If you are new to the stock market and your goal is long term, retirement and child education, then you can invest in stocks and equity mutual funds. If your goal is short term, then avoid risky investments and invest in debt funds and fixed deposits.
Your goals will decide: Top 5 Stock Market Tips Every Beginner Should Know
- How much you should invest
- Where you should invest
- For how long you should invest
3. Start Small and Stay Consistent
As you are new, you do not need a lot of money, many people think that you will need Rs50000 or Rs100000 to invest but this is not true, if you are new then you can start with 100 or 500. Top 5 Stock Market Tips Every Beginner Should Know
Use this simple approach
- Start with small amount
- Invest regularly {every month}
- Increase invest slowly as you learn more
If you invest in this way, then it is also called systematic investing. Investing in this way helps you in increasing your wealth and you are not affected by the ups and downs of the market.
Let’s take an example, suppose you invest Rs.1000 every month for 10 years and get an average return of 12%, then you can increase your amount to more than Rs.2 lakhs.
If you are new in the market, then you can also consider SIP in mutual funds. This is good for those people who do not want to choose different stocks.
4. Diversify Your Investment
You must have heard a saying “Don’t put all your eggs in one basket” and it is absolutely true for investing.
Let’s take an example that you have invested all your money in one stock and if that company sinks tomorrow then you lose everything. But if you invest all your money in 5 to 10 companies or in mutual funds, if one company sinks tomorrow then the rest of the stocks balance your portfolio.
This is called diversification and it helps in reducing your risk. Top 5 Stock Market Tips Every Beginner Should Know
How to do diversification:
- Invest in different sectors {like IT, Pharma, Banking}
- Mix large cap, small cap and mid cap stocks
- Include some mutual funds and ETFs
- Don’t forget emergency saving and fixed income
Pro Tip: a balanced portfolio protects you in tough time and help you grow in long term
5. Think Long–Term - Be Patient
The biggest mistake that new investors make in this market is that they remain slaves of big profits. New people think that this is a ninja technique to earn quick money but their investment is not like this.
It is true that the market keeps fluctuating in the short term but it also increases with time. If you see, people who have invested for a long time generally earn good profits.
Investors like Warren Buffet believe in the long term and they maintain their portfolio for years and decades.
Here is Top 5 Stock Market Tips Every Beginner Should Know why long term investing is so powerful
- You benefit from compounding
- You avoid panic during market crashes
- You stay focus on your goal
Golden Tips: Time spent in the market is more important than timing the market
6. Conclusion
Starting in the stock market may seem a little difficult in the beginning, but if you invest your money in the market with good and right thinking, then you can increase your money successfully. Let your strength learn and stay focused on your goal and keep investing regularly with patience.
Here are the Top 5 Stock Market Tips Every Beginner Should Know remember
- Learn the basic from investing
- Set clear financial goals
- Start small and invest consistently
- Diversify your investment
- Think long term be patient
The most important thing is to keep learning, the more you know about the market, the better your decisions will be. Every Top 5 Stock Market Tips Every Beginner Should Know
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