10 Things Every New Stock
Investor Needs To Know!
Picking up the right stocks for you can be a daunting task,
especially if you are a new stock investor. Being the first time in the stock market, the individual may
end up picking wrong stocks. Stock markets are
definitely not everyone’s cup of tea. Thus, it becomes important that the new
stock investor does his homework well
before putting his money in stock markets of India.
In this article, we shall have a look at 10 things that a new stock
investor should know or keep in mind while investing in the markets.
Basics That a New Investor
The points to be taken into consideration by a new investor are as
1. Buy Low, Sell High
The basic rule in
the stock market is to purchase the shares at a low price and sell them at a
higher price. It sounds like an easy task but it is not. Most of the times the
traders and investors are caught in wrong positions and eventually making a loss.
2. Find Details About Company
Before investing in
the markets, the new investor should find the basic details about the company.
The factors that need to be considered
before investing include profitability of the company, future guidance, EPS,
3. Anything Can Happen
Nothing can be
predicted with full surety about the stock markets. The beauty of stock markets
is its uncertainty. The sudden trend reversal is something that traps many
traders. So one should always be aware and never be overconfident in the stock
4. Long Term is Safer Bet
Stock markets are
considered safe for long-term investment. Daily movements may show volatility and fluctuations. Nevertheless, to
make good wealth one should make an investment
for a longer period. Historically,
long-term investments have fetched higher returns in comparison to short-term
investment. In addition, long-term investments in the stock market have tax benefits
5. Right Stockbroker
A new investor should select his stockbroker wisely. Before selecting any stockbroker, the investor should check the
brokerage rate and facilities provided. Apart from the basic criteria, the new
investor may also check if the broker is willing to help him with his
investments decisions. Also, the new investor should opt for only those
services that will be required.
The new investor
should look for investing in companies that give regular dividends. If the
investment is long-term in nature, the
new investor shall have continuous
earnings in the form of dividends. In addition, companies that offer rich
dividends are most profitable units.
7. Stock Price Evaluation
The new investor
should not evaluate whether the stock is expensive or not by looking at its
price. For example, if the price of the stock is Rs. 20, it does not mean it is
cheap. Similarly, if the price of a stock is Rs. 2000, it does not mean it is
expensive. To know the right price of any stock, its fundamentals
need to be evaluated.
8. Start Small
It is important that
a new investor starts with small
investments. Since it is the learning phase, small investments will make him
ready for big investments. Once an investor is confident of a small investment in the stock, he gets the decision-making
ability to invest big amount.
9. Don’t be Emotional
Stock markets are
unpredictable. Investor’s emotions have no place here. Never be greedy and book
the profits timely. Always keep a stop loss. The investors should avoid
euphoria, excitement and excess optimism. With that control over panic, fear, denial and anxiety are important. Keeping a lid on emotions will make the stock market a better place for new investors.
10. Keep Record
The stockbroker sends contract notes for the day
transactions. Ever after that, the investor should maintain his own record.
This will not only give him the idea of
the profit and loss but also help him to tally the records in case of any error
from stockbroker’s end.
Trade provides various financial services. We guide the new investors
towards the right path in the stock market. We ensure that they are learning
constantly and making good returns. This helps in their confidence building.
Open demat account with us and enjoy our
services. For any query or information, you can reach us via call or email.