The general perception of the Indian stock market is that it is not safe to invest in stocks. However, stock market investing has proved fruitful for innumerable investors and has helped them create their rags-to-riches stories. Stock market investing through intraday trading and other strategies is a sensible way of accumulating wealth while you get busy with your daily life. Here is your guide to safe stock market investing.
Reasons To Invest in the Stock Market
- Small investment: Unlike a business start-up, which requires a huge investment, you can start small in the stock market. Additionally, investing in a business already listed on the stock market is less risky than investing in a new business of your own. Investors can start small by buying only a few shares and grow their investment portfolio as their knowledge and confidence increase.
- High liquidity: The advent of fintech in stock trading has made stock market transactions quick and hassle-free. Investors can get their paperless transactions executed on a mobile application for seamless buying and selling.
- Getting a share in a profitable business: When an investor invests in the shares of an established company, he becomes a party to the company’s growth. He can benefit from the company’s progress through dividends and increasing the value of his shareholdings.
- Choice of investment: Investors are free to invest in stocks of their choice. With some research, they can zero down to the most beneficial stocks in the market as per their investment horizon.
- Easy negotiation and reasonable brokerage charges: An investor does not have to negotiate over his stockholding price with the opposite party. Additionally, he can invest in an upcoming IPO and stocks already in circulation by paying a low brokerage to the brokerage house, further adding to his profits.
- Higher returns: Stock market investments give higher returns to investors than other financial instruments, like fixed deposits. An investor can put his money in stocks of companies having strong fundamentals and watch his investment multiply with time.
Safe Ways to Invest
Let’s find out a few to invest safely in the stock market:
- Calculate the risk: Investors may get easily overwhelmed by the idea of losing money in the stock market. People often think of entering the stock market but back off at the last moment due to the fear of loss. However, if you invest strategically in the right stocks, you can lower the risks associated with your investment. Systematic investment can help an investor mitigate risk in the stock market.
- Start small: An investor may consider beginning to invest with a small amount of money. When your investment is small, you can afford to make mistakes and learn. It boosts your confidence and helps you focus more. Give yourself a reasonable time frame to invest in the stock market.
- Conduct research: Before investing in the stocks of a company, conduct thorough research on its financial standing. Look at how the company has performed historically and what are its future projections. A company with a strong balance sheet will give better returns to its stakeholders than others. You can start your investment journey with companies whose business you understand.
- Look for profitable stocks: These days, there are various advanced techniques and platforms to know about companies that are making profits. These companies may not have a high brand value, but offer promising and stable returns to investors.
- Keep a long-term focus: Patience is the key to having a successful journey in the stock market. Your investment will go through several highs and lows. Do not get emotional or distressed over the fluctuations of your holdings. Keep a long-term perspective in the stock market to multiply your returns.
Avoid the herd mentality when investing in the stock market. Invest according to your own research, reasoning, and requirements. Be prudent and patient with your holdings and take one step at a time towards your financial goals.