How to Invest in Shares/Stock Market?
One wise and successful man once said “Do not put all your eggs in one basket”. So, when you are ready with eggs make sure you keep them in multiple baskets but at the same time do count the number of eggs you kept in each basket.
As much as it is necessary to know about investing in shares and stock market, the very first step is to know what they are. Depending on their specific nature, decide which one is suitable for you whether you are looking for long-term or short-term investment and how much money is available to invest. But first, make sure you have enough money to survive in case of contingencies. Just do not put all your savings/ surplus fund into something as volatile as stocks.
The next important thing is to know your investment goals to manage your finances. Whether you want to buy a house, start a business or pay for your child’s education, plan you investment accordingly. Depending upon your financial soundness, your risk tolerance is your willingness and ability to take risks, which is directly proportional to your stage of life. Say, when you are young and have a stable well-paying income source, investment in more risky stocks will give more return and as you grow old or the income source is unpredictable, better invest in more stable bonds.
Learn about the market as much as you can via books, articles, insights and predictions of experts to gain an overall idea about business cycles, industries, macro-economy and economic indicators; practice paper trading or sign up for a free practice account for online How The Market Works to hone your knowledge and strategy without risking actual money. To formulate expectations for return you must know what the financial data about market performance do and do not signify. For every trade and profit incurs broker’s fee and capital-gain taxes, so avoid the temptation to trade excessively.