List of 5 Tips For Stock Market Beginners: From Warren Buffet to Harshad Mehta. We have all heard stories about people making money and people losing money. This is the place where we can buy and sell the shares of listed companies.
Investing is “essential” and learning how to invest in a “skill“. And through this write-up, we aim to provide 5 basic tips required to foray into the world of investing. So let’s get into the Five tips for Stock Market Beginners.
List of 5 Tips For Stock Market Beginners
Here are five Tips For Stock Market Beginners that they need to be aware of before they start investing in the stock market. Continue reading to learn more.
Tip #1 – Start It As A Side Hustle
We start with high energy and expectations, and when things don’t go the way we want, we end up hating the whole process. That is how bad opinions are formed on something.
Starting off as a side hustle has another advantage where we can understand the market better.
Since we are starting as a side hustle our investment is less, in case of loss we are not all in, we can learn from our mistakes and make better decisions. That’s a good sign.
Tips #2 – Invest With A Specific Goal In Mind
Always invest with a goal. You need to know why you want to invest. It can be for anything; it can be for your retirement, it can be to fund your kids’ education, and it can be for travel. By setting an investment goal, you are inducing a disciplined mindset.
The one problem I faced was that I was not consistent with my investments. I started in the stock market because all my friends were doing it. I did not know why I was doing it and I lost money. That was a costly lesson.
Discipline is important because sometimes we start on a good path and later we deviate into all other things. Learning to control temptations is a must in life and the stock market.
Tip #3 – Only Act On What You Know
Knowledge is power, but we should use our power on something we understand. There is a lot of textbook knowledge that’s good; it gives a conceptual idea but not the whole picture.
There are a lot of instruments to make money in the stock market but it is important to understand how the market works and that comes with learning and experience in the market.
The market is too dynamic to understand. It is ever-changing. Do your research and learn. Take time, be patient.
Quick Read: 7 Stock Investing Mistakes to Avoid As a Beginner!
Tip #4 – Play The Long Game
If you want to make money in the stock market, you have to play the long game. The longer you are in the market, the more money you are going to make. Time is a big advantage. The power of compounding works a lot when you give time.
|Investment Amount||5,000||Investment Amount||5,000|
|Duration||10 Years||Duration||20 Years|
|Rate Of Return||14% PA||Rate Of Return||14% PA|
|Total investment||6,00,000||Total investment||12,00,000|
|Return After 10 years||13,10,457||Return After 20 years||65,81,731|
In this example, we are investing in a mutual fund which is providing a 14 % return every year, we can see a huge difference in the return, the total return on investment if you let it compound for 10 years, 218%, whereas if you do the same investment for 10 more years the total return on investment will be 548%.
This can be for stocks too. Find companies (outcome of your research) and start investing early. Never forget compounding is the eighth wonder of the world.
Tip #5 – Risk And Reward
Risk only exists, if you take it.
If you want something, there is always a cost. There is always hard work involved. It boils down to one thing: do you want it?
The same is for the stock market. The only good thing is that you can put a number on your risk and reward, then it gets defined.
Market slumps are the best buying opportunity for fundamentally sound companies. You might buy a stock for a very low price and if it pays off, your money will grow insanely. Buy at dips.
ALSO READ: Stock Market Basics for Dummies – What Beginners Need to Know?
The stock market is a dynamic world, we have to keep learning every day and keep applying them every day, many people fail to generate returns consistently, keep grinding constantly, and there will be bad days, keep these five tips for stock market beginners in mind and keep yourself updated.
For more tips and ideas on investing, check out the Courses section on Fingrad. As always, Happy Investing!
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