The best 5 investment advice that you will ever need to read and follow to become successful investor in market.
In my previous article I shared 5 Best Trading advices and I had a lot of questions in emails regarding the investment advices and so here I come with 5 best investment advices. Without much of an ado let me start 5 best investment advices.
1. Invest in Tranches
No matter how good you are, don’t deploy all your money that you want to be investing into a particular company in one go. Buy them in small quantity over an elongated period of time. You can see that I am building my wealth building portfolio but then I am not in a hurry to invest in any stock and I am building my portfolio by investing in small tranches.
I prefer to invest over a span of one year but at least couple of quarters are a bare minimum.
Conclusion: If you happen to invest all you wanted to invest in one particular share in less than 6 months, you were hurried into your investment.
2. Start with Blue Chip Stocks
You can always be tempted to earn more by investing in big movers but then it is always better to start investing in blue chip large cap stocks and then slowly make your move to mid cap or small cap companies.
If it seems difficult to start investing in blue chip stocks, start with large cap index based mutual fund and then move slowly to blue chip stocks if need be.
Conclusion: Investing in great companies with proven track record limits your risks and helps you build confidence over time.
3. Research
Investment will be based on how well the company is able to earn for each penny invested as capital and how the company will be able to grow sales.
Don’t just look at price to earnings ratio, price to sales ratio, return on equity, earnings, and debt to equity ratio. Look for the management who is actually doing the business and generating those ratios. This will give you an even deeper feel for a company.
Anybody can be wrong in the market if something went wrong, need to understand what was the cause of it. Is this something that you assumed or got the information from somewhere. How you can avoid such faulty research.
Conclusion: Research for the company to see how well they can grow sales and ultimately make more profit in the future.
4. Make the rules and follow them
Every market participant (trader or investor) has his set of rules
that he has developed over the years and needs to follow them each and
every time he executes an order. You could be driven by market
sentiments but then going back to the rules yet again is always
important.
I have really simple rules for investment.
- Sales should always increase
- Debt should decrease
- Business should not have government intervention…
And you can read all my investment rules here.
Conclusion: You can have your own set of rules and as long as you have verified them and they work for you.
5. Follow Warren Buffett
If your investment rules contradict any bit of what Warren Buffet has done over the years, you are doing it wrong. A person with more than 6 decades of investing experience and is the richest person on earth investing in the equity market cannot go wrong.
Recommend you to read The Warren Buffet Way to start understanding his way of investing and then possibly move to the Intelligent Investor book which Warren Buffet followed for his own investment.
Conclusion: If you allocate time to study his methods, I don’t think it’s that difficult. On the contrary they are quite simple and easy to follow.
Over to you
Would you like to share some investment advice what trading advice you like to share? Share your views in comments below.
I don’t sell old stock cause I found new one, I sell only when me not satisfied with its performance.
Yes you have said same things five months ago as well.
Sorry, forgot
Sir, how difficult to be trader & investor same time ?
Personal choice and I don’t see it to be too difficult if you can unlearn few things in the process. Learning is always simple but unlearning is very difficult.
Unlearn what ?
Read http://shabbir.in/trading-vs-investment/ and http://shabbir.in/trader-or-investor/
Thank you
Unless I sell one scrip completely I don’t look for new, this way, I make myself invested in my previous stocks and I don’t get overwhelmed by new idea. My portfolio max limit is 20 scrips
I am not starting with blue chip, but I am investing what 100% could be totally lost and won’t make me begger.
I am looking for things which will change gradually but for sure, like basmati or led.
I look for the problem people facing, which won’t be solved soon, for ex. Water problem, so pipes or water purifier