Tips on investment in stock market are as follows:
1. The biggest mistakes that investors usually make are to invest directly in the stock market. They buy individual stocks of which they have a little knowledge. On most occasions, it appears that no serious thought has gone into their investment. Retail investors tend to depend on tips or suggestions from others and assume the other person has evaluated that stock, which is often not the case.
2. Unless you desperately need the money to meet an expenditure that cannot be postponed, you need not take it out. It does not make sense to sell your stocks and put the money in another stock without a very strong reason. Similarly, just because your fund has given a great return, don’t sell your units only to take the money and invest in another fund. Stay invested if you don’t need the money for the next one to two years. Take it out if you want to invest in another asset class. Maybe you want to buy some land. Or, maybe, you have a goal like buying a home.
3. Investors those who think that there is some upside left in the market want to invest now or those who never invest in the market but wanting to do so now should invest cautiously. So the investor should not try the market. Yet, sitting on cash is risky. If you do not need the money for two years, you can comfortably invest it in equity. The best way to do so is to invest gradually. If you have Rs 50,000, don’t invest it in the market at one go. Put it in a fixed deposit that allows you to make withdrawals. Every month, withdraw Rs. 5,000 and deposit it in a mutual fund of your choice.
4. Also, in this current bull run, people are enamored by market returns. But individuals must always balance their investments and never put all their money in one asset class.
Let’s say someone in their twenties wants to invest Rs 100. He should invest in Public Provident Fund/ Insurance/ pension plan (Rs 30), debt funds/ bank deposits (Rs 20) and diversified equity mutual funds or shares (Rs 50).
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