A few reminiscences that you normally hear about stock markets are:
‘It is all speculation’
‘It is gambling’
‘The entire stock market is manipulated’
Nothing can be further from the truth when it comes to stock market investments, if looked from a long term time horizon- say more than 3 years and goes up to eternity. Stock markets are extremely useful in earning a good return on extra money to create financial security.
5 simple points that can be kept in mind when it comes to stock market investing is:
Don’t rely on tips
Dare to read the Balance sheet and P & L A/c and if possible, the Annual Report
Don’t panic in extreme situations like the 1500 odd point fall few days back
Don’t invest in something you don’t understand.
Be patient.
Though these points are pretty simple, implementing them is not easy. Even I have failed in remaining calm in situations of extreme volatility. If you cannot do these simple things right, it is best to rely on a financial adviser or a professional entity like mutual fund.
Finding a firm that gives genuine, independent and unbiased stock recommendations is difficult. It you find one, don’t leave it. But, always keep in mind the long term goal of being independent with your finances through self-learning. Happy Investing!