A DISCLAIMER BEFORE I GET into my thoughts on this: INVESTING IN EQUITY ENTAILS many risks, AND INVESTORS SHOULD ONLY MAKE INFORMED DECISIONS.
I am a regular person who is one of the 4% of the population that invests directly in the stock market. Yes, just 4% of Indians put their money in the stock market. It’s not that the rest of them can’t; it’s simply that they don’t think it’s a secure place to invest or save their money. If you intend on investing only based on hearsay or recommendations from Instagram, Telegram, Whatsapp, or the little Rakesh Jhunjhunwalas of your workplace or colony, you should be concerned.
I work a regular day job to make ends meet. I invest in the stock market to increase the value of my money. I’ve lost a lot of money and earned a lot of money in the past. So, I’ve been there and done that. I don’t invest huge sums of money, and I don’t have a portfolio that would make you envious. I do have some practical experience and a point of view.
Is this a blip on the radar?
Simply stated, the answer is no. The phrase “market investing” encompasses a wide range of activities. Businesses are what you invest in. You have the freedom to select what kind of investment you want to make and what basis you want to invest in a business.
Every second or third day, the markets reach new highs, which is when we are still dealing with a pandemic. Why? Because many nations (such as the United States) offer financial assistance to their people, many do not need the additional funds but get it. During a pandemic, they were given this money when spending it on tangible things was either impossible or impractical. So, where did all that cash go? In 2020, India will get $23 billion from foreign institutional investors. This represents an increase of $9 billion over the previous year.
Why are they investing in our markets at a time when global investment is down? They believe in the India narrative, in the country’s industrial production and home consumer development potential. To that, add the government of India’s and the Reserve Bank of India’s policy stimulus initiatives.
Should you put money into something?
Yes, yes, yes, yes, yes, yes, yes, yes, yes, yes, yes, yes, yes And I’ll explain why I believe that. Fact: India has 1.3 billion people, making it a market with 1.3 billion potential customers! Many of these companies will develop as a result of catering to these customers’ future demands.
- Investing in them can help you grow as well, either via dividends (a portion of earnings distributed to shareholders) or by increasing the value of their shares.
- Currently, just 4% of Indians invest in the stock market. This number will rise as financial knowledge rises and a younger generation has a greater appetite for risk. As a consequence, the stock prices of some businesses will increase in tandem with their demand.
What’s the best way to go about it?
For a retail investor seeking long-term gains, research is an essential instrument. You should research industries with high growth potential and businesses with a large market share, their year-over-year performance, promoters, and important executives. Find out how much debt they have and how long they’ve had it. They issue dividends based on how much profit they earn.
Examine their price charts to determine whether or not the stock is volatile. The majority of day traders favor volatile stocks.
What to Do and What Not to Do
- Read books on technical analysis and fundamental analysis.
- Don’t put all of your money into one stock; instead, diversify your portfolio. Amounts are irrelevant once again. If your budget allows, you may purchase only one share of Reliance Industries.
- Don’t put all of your money in at once. If you have the time, keep an eye on pricing and purchase in tiny increments when you think the price is appropriate.
- Don’t go along with the crowd. Make an informed decision.
- Don’t sell out of panic; instead, focus on the long term.
- Remember the long-term perspective; it doesn’t matter if the stock you purchased yesterday is down 3% today; if you’ve done your homework and are confident in the long-term prospects, stay with it.
- It’s a marathon, not a sprint, so be patient.
Finally, emotions such as fear of losing money or desire for profit come into play when actual money is involved. Remember why you’re doing this and what you’ve learned from your study.