Friday, August 27, 2010

Investment Tips for Beginners

With the experience I have gained so far in the stock market investments, I thought of sharing this small information on the investment tips which would help the beginners to start with in stock market investments.


Well, to start with let me give few basic beginners tips for investment in Stock Market.

* Investing in Stocks is not Gambling
- You need to study well about the company before you invest in that stock
- Look at the financials of the company, check the quarter results (net income, net sales, profit, loss)
- Look at their expansion plans, check out the history of the company, past performance
- Analyze the stock price for the past period.

* Diversify your investments
- Don't put all your money in one single company
- Try to put your money in different category of companies like Petroleum, Banking/Finance, Real Estate, Automobile, FMCG, Engineering, Power, ...

* Have patience, don't panic
- If the stock which you invested is going down, don't panic & book loss
- Again check the latest news about the company, if the company is not doing well in the short period due to some reason, then leave it for a long term.
- If the company is really good, then you get good returns in the long run.
- I always prefer investing long term, atleast 10-12 months.
- Investors that are quick to panic often end-up buying high and selling low

* Don't be too Greedy
- There is a saying "bulls make money, bears make money, hogs get slaughtered."
- Book profits when your targeted profits reach

* Price of the stock is not important
- Don't think that if the stock value is less then it gives big returns & if the stock value is more it gives less returns
- Always check the price earning ratio P/E ration.

* Don't keep any emotional attachment with the stock
- Don't love the stock
- If you have already earned the profit which you expected, then book the profits & move on to next.

* Investing longterm Vs Short term
- Short term investment, makes you greedy & believe me you end up in loss if you do frequent short term tradings.
- Disadvantages of short term -> No tax benefit, end up paying more brokerage charges

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