Follow these 12 Personal Rules to be a Successful Stock Market Investor
Are you a beginner taking baby steps in stock market investing? Feeling unprepared in the not so familiar world?
Then, follow these personal tips which will certainly help you.
- Be an informed investor
Be clear about where you want to invest. Understand the business in which you plan to invest, its profitability, market share and brand value. Not understanding the business results in money loss and thereby losing trust in the market.
- Check if company can make profit for the next 20 years
Check whether the company yields profit and the demand and profitability of its products for the next 20 years. If the company remains profitable for the next 20 years, its share price is going to go up and has less chances of being bankrupt.
- Look out for company fundamentals
Forget the market price, check whether the fundamentals of the company are right. Assess its business, demand, and profitability of products.
- Be a disciplined investor
Be clear about the money in hand and its deployment. Plan on how the investment must be done and stick to it. Discipline also means assessing the situation if things go wrong. Imagine a slip in share after you invest. If you have understood the company, you will ensure that the company’s fundamentals are right and invest again considering it as the apt situation.
- Create a balanced portfolio
Balance the number of portfolios. Instead of investing in a single portfolio, diversify the investments. However, limit your portfolios to 10 or 20 since having too many portfolios makes it difficult to monitor.
- Buy stock which can be monitored.
Limit the number of portfolios from 10 to 20 which helps you monitor them on a regular basis.
- Expect a realistic return
Be realistic on the returns. Mutual funds provide an average return of 10 to 12 percent annually.
- Risk appetite
Make yourself aware about the risk inherent in stock market investments. In case of a slip in share price by 20 or 30%, assess whether you can handle the loss and make plans on how to manage it.
- Do not invest with Loan
Never take loans and invest as loan repayment along with risk factor in stock market investments will be an additional burden.
- Invest with extra money
Use idle money to make stock market investments considering the risk factor involved.
- Monitor your portfolio
Monitor your portfolio at least once in three months. This is the reason why the number of portfolios must be less so that it is easy to monitor.
- Do not try to time the market
Do not try to time the market and buy or sell shares accordingly. Create a budget, choose a portfolio, and invest accordingly. You will get the desired returns.
Follow these personal rules to become a disciplined investor. Happy investing !