Must Have Characteristics to Invest in Stock Market
- 29 September 2016 | 373 Views | By Mint2Save
“The only time proven method that has beaten inflation, multiple times is, investment in stocks.”
True, since past three decades, investment in stock exchanges has time to time given astonishing results and has helped several retail and corporate investors in creating good wealth. This long legacy of investment and return has seen several gurus and advisors popping up now and then.
Yes, stock market investment is not made for everyone. A lot of people call it pure gamble, and a lot of people call it a wealth creation tool for the patient. Both the sides have their own views and justifications.
It requires utter patience, holistic knowledge, research, back up funds, higher risk level and a lot more new and temperamental decision making strategy.
In this article, we explore a few characteristics essentially needed to invest in the stock market. Following just one or two would never suffice to make you invest in the stock market. You have to follow and develop each and every trait.
- Age: Invest when young as then you can very well take risks and can even wait for longer durations when returns are not satisfying. Even when the returns are satisfactory, younger people have sufficient time to see their investment bloom and return handsome amounts. However, this does not mean that middle aged and those closing in retirement should not venture into the sotck market. The choices of stocks vary and so does the period for holding in order to get the anticipated return.
- Risk: Risk is one factor that would be the crucial, decisive component of any investment. When it comes to stock, risk is the only factor considered by a lot of established and experienced investors. Make sure that whatever the amount and time you risk, is not fatal towards your saving and investment goals.
- Patience: Wealth creation is not an overnight run. It takes time to build it and there are several ups and downs. But as they say Where there is a will, there is a way. Patience, though never guarantees high returns, serves the perfect ingredient for decision making. Returns are heavily based on our calmness with the investment and patience.
- Funds: Never make stocks the prime hub for your investments. They have been a celebrated investment avenue, but never deserve the prime savings. An age old quote popular among nomadic traders say “To make money, you must first have money”. In the stock market, since the risk is relatively higher, it is recommended to deploy only those funds, which are surplus.
- Trend Analysis: The stock markets follow a particular trend for an unknown amount of time. Value Investing Guru, Benjamin Graham urges the investor to compare buying stocks with groceries and not with perfumes. When buying groceries, you can bluntly ask “How Much?”. Observe the trend in the market, and with the stock/s that you intend to buy. A 6month – 1year trend observation would clear a lot of things such as ups and downs, impacts of major policy changes, financial results, agreements etc. Further, you would be far more confident with your result even when the stock faces jolts.