A General Perception People Have About The Stock Market – Is it Safe to Invest?
Published by Sharekhan Education | May 4, 2021
A General Perception People Have About The Stock Market – Is it Safe to Invest?
Stock Market- a word that produces varied sentiments in individuals at a different phase of the market cycle. It provokes several emotions like greed, fear, excitement, euphoria, depression, anxiety, and pain. Stories of investors who either made it big or lost it all in the markets build apprehension amongst a new breed of people who wish to invest and make a fortune. Hence, it becomes our moral responsibility to educate you to understand how investing in stock markets can build your wealth.
There are various traps that an investor should be aware of before he or she invests in stocks. We will list out some of the common ones that you should avoid to make sure that your investment becomes a safe investment.
Investing based on stock-tips and rumors:
Majority of the newbie or even experienced investors rely on stock-tips and rumors. 99% of the time stock-tips and rumors turn out to be a dud investment.
Investing without any prior research:
One of the most common mistakes that people make is not to follow proper research before investing. Investing in stock requires an investor to do their research thoroughly by reading research reports such as ones provided by Sharekhan Research. A good research report published after an in-depth study into the economy, sector, and company always has a high probability of giving better returns. These research reports are prepared by an analyst who has several years of experience in stock markets. They have interacted with the management of the company to ensure proper due diligence as per SEBI regulations, before recommending investment into stocks.
Investing in stocks without any stop-loss strategy:
Several investors lose money in stocks that initially show bright prospects but turn out to be dud investments, later on. There are several examples of companies in the stock market that tend to fit the bill. In such circumstances, investors tend to stick to their stocks and not cut their losses by selling the stocks. This behavior leads to a cascading impact on their loss because stocks which are fundamentally flawed investment ideas fail to turnaround.
No diversification strategy:
An investor should always diversify his or her investment across sectors and companies to avoid being hit severely by the downfall of a sector or a stock. An example of this could be an airline stock. If the airline stocks happen to be hit by pandemic then other better-performing sectors in the portfolio such as pharmaceuticals or telecom can manage to hold the portfolio together and diversify the risk of huge downfall in the value of the investment.
Investing without any prior education:
Investment in the stock market without prior education is like loading a gun without a trained army man to pull the trigger. Investment education = good return in the stock market.
If you would like to understand more about the concept of ‘investing’, then register for one of our free “Power Money Workshops”. And join our investing education program called “Stock Investor” to polish your investing skills. Learn to identify solid stocks and invest like a pro with our step-by-step training. So, come and experience it yourself!
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