Investors need knowledge, patience and discipline. Don’t get overwhelmed by the profit potential in the stock market and jump into investing. Do not go into day trading, other aggressive trades or option trading until you gain experience. The probability of success in such trades is very low.
Care should be taken to invest in superior stocks. If that is not possible then relatively low risk mutual funds can be chosen for investment. It is always better to start with mutual fund investments through SIP.
Here are some tips for beginners
1. Don’t invest just by watching the news. Don’t fall for investment according to unknown analysts. Avoid investing in debt-ridden companies and companies with poor performance. If choosing IPOs for investment, it is advisable to avoid companies that only use the money raised from the market to pay off debt.
2. Consider bluechip companies for investment. Although the stock price appreciation is not very fast, it will generate good returns in future. Relatively low risk.
3. Pennystocks can sometimes be tempting. But choose the best stocks in each sector and invest. Stocks influencing the index in Nifty and Sensex can be selected for investment.
4. Companies with high promoter share are eligible for investment. Performance and track record of promoters and group companies is another important factor.
5. The investor should also be a good ‘researcher’. One should invest with the help of a good stock market expert when taking decisions on one’s own and not having good knowledge about stocks.