How to Start Investing in the stock market?
Created on 15 Feb 2019
Wraps up in 4 Min
Read by 2k people
Updated on 19 Oct 2019
When I remember my earlier days in the stock market, I wonder at my helplessness. There was no one to
The good news is that investing is simple, it's not rocket science, nor is it as fancy & technical as those Television experts make it sound. Here are a few things you need to know.
Lesson - 1 Don't Expect to get rich Quickly
It takes time for any business to grow its profits and since stocks are nothing but part ownership of that company, the valuation of your stocks will only increase when the profits of the business grow.
Yes, stocks can sometimes appreciate a lot overnight, and in the process, few lucky ones become rich overnight. The key word here is " few lucky ones". Even a lottery makes
Similarly, it's futile to invest in the stock market with the hope you
Lesson 2 - Stock Market is for the long term
If consistently making quick money would have been possible in the stock market, why would rich businessmen work all their life to set up newer businesses, wouldn't they just hire smart stock market experts & invest all their money in the market to compound it quickly?
It's important to remember that the stock market is not a magic wand that will multiply your money. Just like it takes time & effort to make money in every other field of life,
- You have patience
- You are willing to learn
- You have control over your emotions
(Specifically Greed & fear )
Lesson 3 - Stay away from "experts" who provide "tips"
As soon as you enter the market, you will be approached by "Research companies" & experts who will claim to have a secret strategy that guarantees 100% successful. They will lure to all kinds of risky things such as commodity & currency trading, Intraday trading, Futures & Options (Derivatives) etc.
“Derivatives are weapons of Mass Destruction”.
How Stock Market can change your life?
Think of a time you dreamt about starting your business. Everyone dreams about it somewhere down the line. Here are the hurdles you must have faced
1. Lack of skill and expertise
2. Lack of Funds
3. Lack of Experience
4. Shortage of Time & Support
Stock market helps you remove those barriers, you can invest as much or as less as you want, you can invest in the business you like and your money will be managed by skilled, experienced and experts like Ratan Tata or Adi Godrej. Market helps you become an entrepreneur without taking the efforts and headaches involved in it.
Investing in Stocks is similar to investing in a Business
When you start your own business, do you aim to start earning from the first day? We often give our businesses time to grow, we work 12 hours a day for multiple years in order to profit from our business. Investing in stocks is similar, you don’t need to work for your stocks to grow, but you need to give it time. Stocks rise in the long run when the profits of the business grow but, it takes time for the profits to grow
Stocks Vs. Gold Vs. Property
Be it Gold, Property or Fixed Deposits, we know that these assets will take time to rise, we don't buy and sell gold in 2 months or 2 weeks. But when it comes to stocks, we wish to earn in a month. This is the mindset that stops people from creating wealth in the market. Warren Buffett would never have been Warren Buffet if he had sold Coca Cola in 2 months or even 2 Years.
He became the richest man on earth because
1. He Bought Good Stocks
2. He bought them at reasonable valuations
3. He held those stocks for 10 years or more
Keep your Stocks for as long as you keep Gold and Property and stocks will reward you much more than any other asset class.
Some other benefits of Stocks
- Long term capital Gains up to Rs 1 lakh is tax free and above 1
lakhis taxable @10%
- Provides regular income through dividends as well as Capital appreciation
- No threat of theft (Gold) or illegal occupation (property)
- Historical returns have been much more than Gold or Property
- High liquidity and ease of transactions
To know more about value investing click here
To get research backed and unbiased advise click here
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