I don’t need any help. I would like to go about it alone. Isn't this what you must have heard a thousand times whenever the topic of investing in the share market comes up? .What do you hear when you broach this topic among your friends? I wear " My Heart On My Sleeve " .I Shoot First And Ask Questions Later ". This Rambo Mentality is one of the main reasons why lakhs of investors have lost crores of rupees in the stock markets. Many a time it is sheer greed which propels an investor to jump into the share market without fully understanding what he is getting into. Tripling Returns In A Few Months. Mind Boggling Rates Of Return .Shoot For The Stars.These are all the macho words used before your friends jumped into the stock market. Meet your friends a few months later. What Do You Hear? Isn't it a tale of the torrid time they had and how they burnt their fingers in the stock market .Do you want the same thing to happen to you, Definitely Not Isn’t It? Then contact the team of Financial Planners at IndianMoney.com who are always there for you to plan your stock market needs in a most effective and efficient manner. You can explore this unique Free Advisory Service just by giving a missed call on 022 6181 6111.
You must be aware of the famous phrase " Buy Low Sell High ". You know this theory and want to put it into practice .How do you know when the market is going to hit rock bottom? The Bse Sensex is now at 19000 points .You want to wait till it hits 10000 points.You must be knowing that the Bse Sensex has not fallen below 14000 since mid 2009.This is well over 4 years ago. How Long Will You Wait Before You Enter The Market?. Another dilemma investor’s face is when to exit the market. You must have noticed that the Bse Sensex has steadily increased from 15000 points to a value of 20000 points in the last year .If you had entered the market a year ago you must have noticed a rapid rise in the value of the Bse Sensex. Were You Sitting On The Fence Wondering When To Cash In On Those Stocks? Missed the bus. Fret Not .You are in esteemed company.
Do you feel that heady rush of blood whenever the stock market rises. You lose control of your emotions and jump up and down your chair. What are your emotions when that stock market suddenly crashes? You must be knowing that many hospital beds in some of the most expensive hospitals in India are filled with such patients who could not keep stock of their emotions. You must have heard the famous saying by Warren Buffett " Be Fearful When Others Are Greedy And Greedy When Others Are Fearful ". What happens when you are too greedy? Let us consider that you have purchased the shares of a good blue chip Information Technology company at INR 1300 and it has zoomed to INR 1500 in a span of 3 Months. You decide not to sell these shares and a few months later the stock has hit 1200. An Opportunity Lost? What happens if you are too fearful? You must have noticed that in a bearish market strange emotions grip you. Stop Loss is your perceived weapon of choice. You set a 10% limit on your share. Then your downsides or losses are limited to just 10% of your investments. However if this is followed on a regular basis then the booking of losses habit is encouraged .and in time you might unknowingly book huge losses. You also need to know about the Gamblers Itch. You must have noticed how a gambler plays his game. He never quits when he is ahead. He keeps playing until he loses everything .The stock market also brings out similar emotions in you. So it is always good to maintain a grip on your emotions.
You must be knowing that a false misconception prevails among the new stock market investors. The stock market is a quick and an easy way to escape from that debt trap. The returns from the market quadruple and your debt vanishes .What Do You Think Really Happens? Do you think a person who can barely walk can run the marathon? Put your mind on pause mode .Never put your livelihood on hold .What would you eat if your bets were wrong and the market does not move according to your whims and fancies. Always pay off your debts first before entering into the stock market. Then you save enough such that you could have a decent life .From your extra portions you could invest in the stock market. What would happen if you entered the market and you do not have sufficient savings? You would be forced to sell your stocks in a bearish market at huge losses in order to pay your home mortgage? Will your bank wait for the stock market to go back to its winning ways?
Would you jump into a river if you did not know how to swim? No definitely not? In a similar way don’t you think you need to study what you are getting into when you enter the stock market? Before investing it would be wise if you thoroughly read up on stock markets ,stock market strategies, market indices and the various other economic factors which would have a bearing on your investments .Know the costs involved in the opening of the demat and trading accounts, The brokerage commissions, The Capital gains tax, Securities transaction tax and so on. Always study the macroeconomic environment and the effect inflation plays on your investments. Take time out to study the terms used in the stock market. Remember never to put all your eggs in one basket. You must be knowing that when you travel you put some of your cash in your wallet, some in your bag and the remaining amounts in a secret pocket in your jeans. What happens if you were robbed of your wallet? You still have some cash left behind. In a similar way if you invest in different shares in different sectors of the market you can diversify your portfolio .In this way when some of your stocks underperform the market you get compensated as certain stocks of yours are simultaneously over performing the market.
Let us consider that you are at a party where you overhear a conversation between a couple of stock brokers one of whom states that XYZ share would zoom up in the next few months tripling your returns. What Would You Do Now? You come home and see your old fridge, old car, old television set and the old washing machine. After listening to a long sermon from your wife about the shortage of funds at home you reach for that television remote to watch your favourite soccer match and tell her, Do Not Fret .I will hit the jackpot in a few months. She of course thinks it is one of those old yarns. Visions of a new car, fridge and so on float in your mind. You collect all the funds you can lay your hands on, beg and borrow and put all your hard earned money and the borrowed funds into XYZ share hoping for those tripling returns. A few months later you realise that XYZ Company is one of those fly by night operators, imagine what thoughts and emotions would go through your mind?
I would like to end this article with the famous saying " A Good Head And A Good Heart Are Always A Formidable Combination ". It would be wise to enter the stock markets with a level mind and a stout heart and be unfazed when the market goes through its bull and bear phases.
The research team at IndianMoney.com comprises of certified and experienced professionals who share the company's vision to make every Indian financially literate by equipping every Indian with right and unbiased advice. IndianMoney.com research team provides newsletters, articles, videos and FAQs on various financial products and concepts only to help you make wise financial decisions.
Subscribe to our Youtube Channel
Hello friend! I am your personal financial advisor. By the end of this interactive session, I will help you to plan yours and your family's finances to ensure a better future.