Stock Market Investment
Stock Market Investment
invest stock market
Buying and selling of shares happen in Stock market. A share of stock is the smallest unit of ownership in a company. If you own a share of a company’s stock, you are a part owner of the company. There are two types of stock: Common stock, Preferred stock. Most of the stock held by individuals is common stock. Why Investing In Stock Market? Investing is different from saving. Investing in stocks means you are partial owner of a business. If your investment horizon is 20 years, statistically return of your stock portfolio will at least beat inflation.
How to do Portfolio Management in stock Market?
Understand company’s balance sheet & Profit- loss statement. Look for Profitability in business, cash in hand, auditor’s report, director report of the company. Check return on asset. price/earning, return on equity and credit management of the company for last 5 years. If all these are satisfactory, invest in the company. In the high bull market do partial profit book regularly.
Diversification is the key to successful investing. Diversifying your investments might include purchasing various stocks in many different industries. It may include purchasing bonds, investing in money market accounts, or even in some real property. It may take time to diversify your portfolio. Depending on how much you have to initially invest, you may have to start with one type of investment, and invest in other areas as time goes by.
Over time, research has shown that investors who have diversified portfolios usually see more consistent and stable returns on their investments than those who just invest in one thing. By investing in several different markets, you will actually be at less risk also.
A good diversification will usually include stocks, bonds, real property, and cash. It may take time to diversify your portfolio. Depending on how much you have to initially invest, you may have to start with one type of investment, and invest in other areas as time goes by.
Experts also suggest that you spread your investment money evenly among your investments. In other words, if you start with $.10,000 to invest, invest $2,500 in stocks, $2,500 in Mutual Funds, 2,500 in bonds, and put 2,500 in an interest bearing Fixed Deposit account.
Money Management tricks for you to ride Bear – Bull of Stock Market
1. Never investment more than 50% of your savings in stock market
2. It is necessary to invest in speculative investment for big money but never invest more than 10% of your portfolio.
3. Get out of loss making investment. It will protect you from bigger loss and the loss you can offset against your profit in your tax return.
4. Do not make buy decision out of greed.
5. Do not take sell decision under panic
6. Understand the market and where you investment with clear objective why you are investing.
Also read about self directed ira
