What are Dos and Dont’s for newbie investor in stock market?

Investing in equity share is considered the most lucrative investment vehicle. Though investing in share is considered way more risky than other investment options, it remained at the top of the investor’s preference list due to the high return it offers in any given period compared to other investment options. An investor can purchase equity shares of a listed company from the stock market through his Trading account. A trading account can be opened with any stockbrokers by doing the required paperwork and payment of required fees.

There is no doubt that equity investment yields high-return but the investor must keep in his mind that the high return is always accompanied by high risk. Therefore, the prudent practice will be to exercise the necessary cares and take a cautious approach while selecting shares because all that glitters are not gold. Therefore, a well-crafted approach needs to be adopted by the investor in the stock picking task.  It should be kept in mind that investing in the stock market is subject to the risk of market volatility and uncertainty, and no approach can cushion the investor completely from that risk. However, if an investor follows these five rules that we are going to discuss below he will be safeguarded to a reasonable extent. This five-point checklist for investing in share will help an investor to pick right share for investment.

The amazon jungle of finance undoubtedly is the stock market. Here in this market, big fishes always eat small fishes. Therefore, when you start afresh to invest in this market you need to follow some untold rules strictly and consistently because this market knows no mercy. You miss it you lost your life savings and capitals. In this short article, I will try to bring out a few things in this that you need to do and things you need to avoid while trading in this market.

Let me tell you the precaution first,

  1. Don’t be greedy.
  2. Invest only residual income after saving.
  3. don’t take a loan to invest in the stock market.
  4. don’t go for intra day trade too early.
  5. Don’t panic when the market falls. Market goes down to rise up again.
  6. Don’t be over excited when the market rises.
  7. When buying and selling stocks you need to consider about brokerage, STT, service tax and Dp holding charges.
  8. always use a stop loss.
  9. Don’t put blind faith on general advice given by analyst on TV or media. always use your due diligence.
  10. Do not forget to learn accountancy.

 

 

Now, the question is in which company you invest. while you choose a company makes sure to look at its fundamental as well as the technical chart of its historical data. while choosing a company make sure that the company has

  1. Potential growth
  2. positive EPS
  3. favorable debt-equity ratio
  4. the intrinsic value of the stock
  5. favorable PE ratio
  6. renowned promoters.The above list is not exhaustive rather it is a general guideline. You need to look after other aspects like future prospects of the companies business, global and national economy, political scenario etc.

An investor must consider the above five factors while selecting a company for investment purpose. If you consider any additional point that should be included in the above list of “Five point checklist for investing in share” then please write in the comment section of this article. Thank You.

About KOUSHIK DAS

I am Koushik Das, and I live in Kolkata, India. I am a passionate personal finance blogger at iplancash.com
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