I am not any stock market guru but will share the following view to someone who is willing to start investing in stock market.
1. Start Investing Today
No matter what age you are at, the best day to start investing is today. It is the best decision for you. You shouldn’t be considering what if you started a couple of years back and you shouldn’t wait for few years either.
The best time to start investing is today and you shouldn’t be worried too much about start big but focus on starting early.
2. Invest in yourself
If you aren’t growing as a trader or investor, you won’t have the success in the long run. One should be a very good reader to be a trader or investor.
The best investment of an investor is the investment in his or her education about investing.
3. Stocks aren’t the only option
Stocks are for those who can keep track of the companies fundamentals and their changing landscape at least few times a year. If you can’t you don’t need to. The same results can be achieved with ETFs, Index funds and mutual funds and so investor should consider investing in mutual funds overstocks.
I don’t actively invest in mutual funds but that doesn’t mean you should be doing the same. One should consider investing in stocks only if he knows he can beat the returns from the mutual funds by investing in stocks. If you can’t you aren’t competing with the mutual fund manager and it is better to be investing with them.
4. Direct Funds Always
Warren Buffet suggests one should invest in the index funds with the lowest expense ratio. In India, regular funds have lot more expense ratio than direct funds. If you want to be following Warren Buffet and has an option to invest in a fund that offers lower expense ratio, opt for it over others.
Direct funds may have more pain to manage the paperwork but in the long run and over time, it pays off. Here is a step by step guide to how one can invest in direct funds.
5. Don’t be a Full-Time Investor
Most of us can have an issue with jobs and if you happen to be one, it isn’t the right time and right frame of mind to be a full-time trader or investor.
It is time to look for another workplace and make a switch and opt for a job you love. If you happen to be finding jobs that have the same kind of problem, consider doing a business or entrepreneurship. There are many points one should consider to become a trader or investor full time.
6. Invest in Common Businesses
Often we try to find multi-baggers and in the process we often neglect the multi-baggers that are just in front of us. We have to keep our eyes and ears open just to identify them.
The multi-baggers of the yesteryears are so commonly used products of companies.
- Either Motor, Hero Honda, Maruti Suzuki and you will get these ideas if you keep your eyes open on the street.
- HUL, Emami, Page Industries are the companies of the products you may commonly use.
Take the same example of Warren Buffet and you will find companies like Wrigley chewing gums, Coca-Cola, Heinz etc
The ideas are endless and in front of you. Here is the complete process of finding good stocks for investment.
7. Be Ready to Loose
Every investor makes mistakes and there is nothing wrong with them as long as they aren’t big enough and you take a leaf out of it, don’t repeat them and move on.
Warren Buffet has accepted the mistakes he did of not getting into IT stocks earlier or Ramdeo Agarwal for Bharti Airtel for longer than it needed to be held or Rakesh Jhunjhunwala about his investment in few stocks.
Once you have realized the mistake, remaining invested in the stock can lead to disasters.
8. Finally Be Greedy
You will often read that greed is one of the factors that can cause catastrophic in the market but I believe one should be really greedy when it comes to investing.
If you have identified a good company, has ticked out all the investment checklists, you should be greedy in the market.
Making a move from being a trader to the investor, I am slowly learning the process to be greedy when booking profits.
I invested in Britannia Industries on the BREXIT day i.e. in June 2016 and after a year I was out of the stock at around 3700 making decent returns. The profit would have been lot more if I kept holding it.