The Do's and Don'ts of Stock Picking For Investment
in the stock market is a tricky task. Investing your money in the right stocks
is critical to reaching your financial goals. Sometimes people may take a lot
of time to feel comfortable about investing in the stock market because of the
risks involved. To simplify, the task of investing in the stock market the
investors may follow the list of dos and don’ts that can help them generate
profits. In this article, we list out the dos and don’ts of stock picking for
investment to help investors pick the right stocks and reduce their mistakes.
Do's for Stock Market Investing
At Early Age
best time to start investing in the stock market is starting at an early age.
Young investors have the liberty of taking risks and recovering from the wrong
investment decisions without ruining their long-term goals. Starting investment
at an early age also gives the compounding advantage and benefit of reinvesting
Your Risk Profile
your risk profile is essential before investing in the stock market. Always
consider how much risk you can afford to take in the market. If you aim for
higher returns, the risk will be higher and vice versa. Your risk profile is
based on your risk-taking capacity, risk tolerance and risk requirements.
of a portfolio is the key to success in the stock market. Avoid putting all
your money in a single stock. Distribute your capital among different stocks
depending on your risk profile. By diversifying you get exposure to stocks
belonging to different industries.
Your Additional Funds Only
must invest only additional funds in the stock market. You must consider your
other expenses like rent, EMIs, daily expenses, etc. before putting money in
the market. Investing your surplus funds will not put any pressure on your
in stocks is an art. You must learn the different parameters and study the
company correctly before investing in it. Carry out your research, read the
financial statements of the company, etc. before finding stocks that are good
for investment. If you do not have the right knowledge of picking the stock,
you may consult a financial advisor to guide you.
Don’ts for Stock Market Investing
Keep Unrealistic Expectations
you invest in the stock market, it is not right to keep unrealistic
expectations. The expectation of high returns would force you to take higher
risks and that might not turn out well. The investment in any stock must be
based on research, analysis and performance of the company. Keeping unrealistic
expectations from stocks can harm your overall portfolio mix.
in stocks just because other people are also doing the same is a bad approach
in the stock market. You must restrict yourself to investing in stocks that
fulfils the various criteria of your research. Herd mentality often leads to
losses in the stock market.
Invest Based on Tips
manipulation is often done by spreading misinformation about a stock to the
investors. The information is spread to attract investors and trap them.
Investing in stocks must be done by consuming only that information that is
useful to your research and everything else should take a backseat.
market presents various threats and opportunities. By trusting your research
process you can build a well-diversified portfolio. If you are a beginner or
seek any help regarding investing in the stock market, you may consider opening
a demat account with Indira Securities.