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Finance Strategy

5 Common Mistakes Beginners Make While Investing In Stocks

5 Common Mistakes Beginners Make While Investing In Stocks
5 Common Mistakes Beginners Make While Investing In Stocks

Summary: The stock market offers ample opportunities for wealth creation. But is it easy for beginners? Find out 5 common mistakes that first-timers should avoid while picking stocks.

Invest in the stock market—-this was the millionth time Rahul heard this suggestion from his friend Sridhar when he asked about wealth creation. Trading, mutual funds, long day, short day, intra-day, and many other terms were thrown at him by Sridhar that amazed Rahul.

Rahul asked Sridhar how to invest in stocks and his dear friend asked him to open a Demat account. And as eager as he was Rahul begins his trading journey by investing in cheaper stocks without doing fundamental analysis.

Result? He lost INR 5000 in 2 days. Though Sridhar showed a great way to wealth creation, he should have told Rahul to avoid making hasty decisions. Investing in the stock market can be tricky, especially for amateurs. And for a new investor, it can be an alluring place.

For those who are new to this world, it might seem like gambling where people make and lose fortunes. But with the right approach and fundamental analysis of stocks, one can create wealth. The investment process has become hassle-free these days.

However, even with the fundamental knowledge of stocks, you can make these 5 mistakes as a first-time investor:

1. Not Understanding the Fundamentals of Stock Market

Ignoring the basic facts about the stock market can result in you losing your hard-earned money. Understanding concepts like ‘Going Long’, Going Short’, ask price, bid price, bid quantity, offer quantity, and stock price changes, PE ratio, PB ratio, dividend yield, a margin of safety, and many other factors.

To know everything about Share Market from the scratch, watch here:

2. To Not Have a Proper Investment Plan

Before you start investing, as a new investor you must have a proper investment plan. Being an amateur every stock and share will look promising. This can often make you lose direction by unplanned investments. Hence, it is very essential to understand your objectives and your financial goals. The investment objective is not subjective and every investor has their own financial goals.

3. Unaware About Risk Factors

The Share market is full of risks. So another mistake that first-time investors often make is that they do not decide how much they are willing to take risks. Investors who have a low-risk appetite may consider investing in stocks that have a low-risk appetite that provides stable returns and is less impacted by market volatility.

4. Wrong Risk Assessment

The stock market is exposed to high market volatility. So while trading online for the first time, it is best to strike a balance between unnecessary risk-taking and calculative risks. Sometimes beginners fail to know the margins they are willing to push while taking risks. Hence, understanding your risk-taking ability is of paramount importance.

5. Not Making a Diverse Portfolio

Many investors who trade online often fail to diversify their investments. They often fail to understand that investing in a single company or investing in only a single type of investment is never a profitable idea. A market crash or a single negative market movement can result in huge financial losses.

An ideal portfolio must comprise of stocks from different companies, along with investment in futures and derivatives.

Talking about money and growing it by investing in multiple stocks and companies may seem daunting at first. But with in-depth research and fundamental analysis of each stock before purchasing can give high returns.

So whether you are a beginner who has set goals and wants to invest in stocks to fulfill them or a professional who is aware of all the ups and downs of the market, if you don`t do enough research, you will end up raking in losses. The above-mentioned mistakes are probably common because often people ignore the basics. Keep these factors in your mind and be a smart investor.

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Business motivation Strategy

7 Important Tips For People Investing In Stock Market For The First Time!

7 Important Tips For People Investing In Stock Market For The First Time!
7 Important Tips For People Investing In Stock Market For The First Time!

The stock market is a fascinating world, and venturing inside it is like a gamble for everyone. Where the fluctuating highs and lows of the market can seem like a playground for professional traders, it could be frustrating for someone who has just entered the world of the share market.

The uncertainty and unpredictability of the market can be frustrating for a first-time investor. However, having adequate knowledge and the required analysis of the stock market can help you receive long-term returns. You can also hire the best business coach in India to get information about stocks, equity, and the share market.

In the beginning, the fear of putting your money in the market might make you change your mind, but keeping yourself patient and calm can help you focus on long-term returns on your investment.

To know everything about Share Market from the scratch, watch

So what are those 7 things that every new investor should keep in mind before putting their money in the market? Let`s find out:

  1. Invest with a Game Plan

“Why am I investing, and what is my goal?”- this is something every individual should ask himself or herself before making their first investment. Having a game plan is necessary and an essential step in the process. Having a clear objective in your mind helps you to achieve goals.

For instance, if you are planning to own a house in the future and your goal is to save money for that in 10 years, you should figure out how much you will need to invest monthly to reach your goal.

  1. Diverse Portfolio

Investing is not just about putting your money in the stock market. Trying to get heavy returns by putting all your money into a few hot stocks will fail in the long run. Despite all the hype that is being created around stock picking, the path to long-term wealth creation is asset allocation by building a diverse portfolio. A portfolio with diverse allocation includes stocks, bonds, and a range of other asset classes.

  1. Stick to Single Strategy

If you would Google for investment strategies, you will be presented with tens of thousands of results. However, it can be overwhelming and create confusion for someone who is exploring the world of the stock market for the first time. Hence, the best way is to focus on a single strategy and become proficient at it. Eventually, you will start to make money over time.

  1. Develop Long-term Thinking

The world of the share market often sells fear or greed. But, it is essential to keep in mind that when it comes to the stock market or trading, the short-term approach does not give fruitful results. Hence, always think “long-term” when it comes to the trading world. Why? It is like a roller-coaster ride of a lifetime that has the potential for outstanding long-term personal benefit.

Do not get sold for the idea of “get rich quick” or the day-to-day emotions. Set a clear goal, and let the stock market do what it is meant to do.

  1. Buy only when you understand it!

In 2017, Bitcoin was the hottest thing to put money on- and more often than not, there will be a particular investment that gets a lot of attention. However, you must invest money in it only if you understand the nitty-gritty of it.

New investors often have this idea of “get rich quick” and end up losing more money. Staying away from that mindset will help you save your money. Buy a stock only if you know the product or service. Otherwise, you can also put your money in a low expense stock, or a mutual fund can be a good start.

  1. Invest in Balanced Funds Systematically

Ask anyone who has been trading in the stock market and they will tell you how a balanced approach over time will always provide growth. This has made so many people`s retirement extremely comfortable.

However, you will not find many takers of this golden approach. The major reason behind it is the overheard stock tip. It may yield fascinating results on rare occasions, but more often than not the money is lost quickly. To avoid risk, it is highly recommended to put your money in balance funds systematically over time.

  1. Practice Patience

The world of shares and the stock market can be overwhelming. If this is the first time you are trying to explore the dynamics of it, you will have to understand that it`s a long-term game. You will have the time to ride the fluctuating waves and the flexibility to diversify your risk. Do not make any rash decisions and take time to discuss the pros and cons with your advisor. They might charge you a little, but they will educate you on what exactly is going on in the market.

So take your time and learn from them as it will help you make an informed decision.

Stocks move up and down, way too quickly. You might feel your heart skipping a beat with every high and low of the stock you have put your money on. However, do not panic and sell everything, if you see a 2% drop in your portfolio. Constant buying and selling will lower your returns in the long run.

Always choose stocks that you truly believe in by analyzing their past performance. Buy and hold them. It will yield long-term returns.

Are you new to the world of the share and stock market? Then you can take our business training programs where you will gain in-depth knowledge about share and the stock market in a very engaging and easy-to-understand format.

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Webinar

How To Create Wealth Using Asset Allocation?

How To Create Wealth Using Asset Allocation?
How To Create Wealth Using Asset Allocation?

Simran has just landed her first job. She is excited about her new job, but also keen to save and invest in her future. However, just like many others, she is confused about where she should start.

Some of her friends are trading in the stock market while others are thinking about invest in PPF. But, Simran is way too worried and is pondering over her investment options as she does not want to take too much risk with her hard-earned money.

Though bank deposits are a safer option, the fixed return is not appealing to her. When it comes to investing in a mutual fund, she is not sure which mutual fund she should buy and invest in, as there are plenty of choices.

So how should she make her investment choices, so that over a while she can save and build wealth too?

Does Simran`s story sound familiar to your own? Don`t worry! You are not alone!

Only 4% of Indians prefer to invest in stocks, and exchanges along with many scams are to be blamed for keeping them away from equity markets.

“We have a market that is not safe for investors to a large extent”, says Ashish Kumar Chauhan, CEO & Managing Director of Bombay Stock Exchange.

And with thousands of bonds, stocks, and mutual funds to choose from, making the right decision to invest can confuse even the most seasoned investor. However, if you do not take the leverage of it, you will undermine your own ability to build wealth and secure financial life for retirement.

So what is the first step towards building wealth? Instead of selecting stocks, begin by deciding what percentage of stocks, bonds, and mutual funds you want to hold. This process is known as asset allocation.

What Is Asset Allocation?

Asset Allocation is a brilliant investment technique. It involves creating a portfolio that aims to balance risk by dividing assets into major categories like bonds, cash, real estate, stocks, and derivatives.

Each asset class has distinct levels of return and risk. Hence, each will behave differently over time. Where one asset category can increase in value, the other might not give that much return. Though some see this technique to get mediocre returns, it is the best protection plan for people like Simran, who don’t want to take much risk.

However, there is no single or set formula for asset allocation that guarantees good returns. And if there were, it would be difficult for us to explain it here.

We have outlined 3 essential points that you must consider when thinking about asset allocation:

  1. Risk against Return

Asset allocation is all about the risk-return tradeoff. It forms the basis of the entire technique. Everyone wants the highest possible return, but it is more than just choosing high-potential assets.  Moreover, it isn`t always the best answer!

The financial crisis of 1929, 1981, 1987, and 2007 to 2009 are the best examples of how investing only in stocks with the highest potential returns is not the most prudent plan of action. Every year your returns are going to be beaten by another investor, pension plan, and mutual fund, etc.

The ability to weigh the relationship between risk and return is what makes an investor successful.

  1. Timing is Crucial

For every 10 years, you delay saving for your long-term future goals, you have to save three times as much every month to catch up. Starting early like Simran allows you to take advantage of compounding and the time value of money. It also gives you a buffer for making high-risk investments, namely stocks.

  1. Know your Goals!

Whether it is Simran or any one of us who is working, we all have goals! Goals that we want to pursue and fulfill. Be it owing to an apartment, a car, international vacation, or building a startup, you must think about an asset allocation plan with the right mix.

For long-term goals, you do not have to worry about fluctuations in the short market. However, for short-term goals, you may need to tilt your asset allocation to fixed-income investments that have less risk.

Once you determine the right mix of bonds, stocks, and other investments, it is time to implement it. Categorize your stocks or bonds according to their maturity- short, mid, or long term.

On the last note, there is no single solution for allocating assets. Just like Simran and her friends, individual investors require individual solutions. Asset allocation is not a one-time event. You can modify it according to your future goals and requirement. It is a life-long process of progression and fine-tuning.

To join our free Webinar on Asset Allocation,

Click here: www.facebook.com/badabusinesspvtltd.

Date & Time: Sunday 23rd May 2021 | 7 PM-8PM

To gain in-depth knowledge about the stock market, watch https://youtu.be/L_iJCNzDe-s.

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Finance

3 Common Mistakes every Beginner should avoid while investing in Stocks

avoid these stock market mistakes

Piyush, who is an architect by profession, has always invested in schemes that are risk-free. Recently, his friend Hemant told him about his income generated through Mutual Funds. Piyush decided to take a shot at mutual funds.

Piyush replicated his friend`s portfolio and invested his money. To his disappointment, Piyush did not make as much money as his friend did. He also suffered losses. So what could be the reason behind Hemant making a profit in the same scheme, while Piyush suffered losses?

Piyush committed one mistake while investing in stocks that most Indians make. However, it is better to understand these mistakes initially to prevent losses in the future.

Here is a list of some of the most common mistakes that everyone must avoid while investing in stocks:

  1. Lack of Planning

Seasoned investors play their game in the market based on facts and figures. However, this is where a beginner can go wrong. Guessing and blindly investing in stocks might appear to be performing well. However, the absence of proper planning and vague end goals can result in a chaotic mess. Always check the financial data of the company you are planning to invest in and then make informed decisions.

  1. Decision-based on Personal Bias

Being biased can never be beneficial, be it any aspect of life. And the stock market is no exception! Many beginners or first-time investors tend to either buy only companies that are known or the companies they like.

This is not the best way to invest your money in the stock market. The companies you like or know may not be performing well. This way you can also risk your profile or your financial goals.

  1. Short Term Focus

If you have a notion in your mind that investing in the stock market will make you rich quickly then this is another mistake that you must avoid. Having a short-term goal can leave a huge impact on your investment decisions. Avoid taking rash and uninformed decisions as it can likely result in losses.

These three mistakes are the most common ones that every first-time investor makes initially. Trading in investing and equity in the financial markets requires in-depth knowledge of the stock market.

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Business motivation

The Simple Trick To Gain Profits In Stock Market

It is important to get into the depths of the market to reach the heights of the market. This is a very important step before taking a step towards investing in the stock market. The stock market is like the game of snakes and ladders, where you may get good shares in form of ladders that may help you to get great profits or even bite you into the downfall of losses like snakes. What sets the stock market apart from the game is that while luck is only what lets you proceed with the game, you can gain high profits by understanding the market if you are planning to invest in the stock market.

When you visit a grocery store or a vendor, you may get vegetables at different costs at different times. Sometimes you get groceries at a cheap rate but you later find out that it is not of good quality. Sometimes, you may buy expensive vegetables expecting good quality, but end up being fooled by the street vendor. To get good quality vegetables at a fair price, you need to know the vegetables like how to check their quality and the current ongoing price. Similarly, you also need to know the shares you are investing in before you proceed in the investment, such as the increase and decrease in price and demand of the shares. Just like you bargain with a grocery vendor, you can bargain with your shares on when you want to buy them i.e., at what point in time.

People generally make the mistake of taking tips from advisors, friends, or family before investing in stocks of a particular company. Dr. Vivek Bindra, an Internationally acclaimed business coach suggests people leave the shares in restaurants. To understand which companies can one invest in, they can check Nifty 50, a list of the top 50 companies in India. Nifty offers investors a price earning ratio (PE) i.e., a comparison between how much they will invest and how much they will earn by investing in a particular company. One is also advised to check the ratio for the entire share market. The PE ranges between 11 and 30, 10 being the lowest in the market trends and 30 being the highest. One can invest his money when PE is around 11, for example, to get high profits when the shares see a high rise. Moreover, one should avoid investing when PE is between 25-30, as the chances of shares increasing are very low and one may end up being at a loss.

There is a lack of knowledge about the stock market amongst the Indians, due to which only 4% invested in it, whereas about 50% of people in America invest in stocks. If you are interested in investing in the stock market and want to learn more about it, you can join the “Stock Market” Problem Solving Courses which gives you complete guidance about what the stock market is, and how you can get great profits by investing in it. To know more or to register, visit https://www.badabusiness.com/psc?ref_code=ArticlesLeads

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Strategy

BSE Signs MoU With Maharashtra Govt To Encourage SME Listing; Here’s How the Pact Will Benefit SMEs in Maharashtra

Online Business
Online Business

Mumbai, January 20: In a bid to create awareness about benefits of listing among small and medium enterprises (SMEs) in Maharashtra, leading stock exchange BSE has now joined hands with the state government. The BSE has signed a memorandum of understanding (MoU) with the government of Maharashtra on Tuesday, the exchange said in a statement. Under the pact, the BSE will provide intellectual and manpower support to create awareness about the benefits of listing among SMEs and will enable capacity building to such enterprises to fulfil listing requirements. Moreover, the BSE will provide training and capacity building support to District Industries Centre officials.

Here’s How the SMEs in Maharashtra Would Benefit:

  1. Under the MoU, the Maharashtra government will help in mobilizing the SME representatives and state and regional associations to encourage their SME members to attend capacity building programmes.
  2. In addition, the government will also reach out to industrial associations in the state for conducting joint seminars with BSE to create awareness among SMEs about benefits of listing.
  3. This MoU will help the micro, small and medium industries in the state to get registered in the capital market and raise capital from the public capital market.
  4. Subhash Desai, Minister for Industries & Mining in Maharashtra government said that BSE will also provide technical support to all the MSME industries in Maharashtra.
  5. The pact will further encourage more and more SMEs to list and raise equity capital on the exchange.

Ajay Thakur, Head-BSE SME and Startups said, “Through this collaborative effort, we will be able to reach out to various SME representatives and industry associations of the state and create greater awareness about the benefits of listings among SMEs of the state.

BSE had launched its SME platform in March, 2012. Till now,  331 companies got listed on the platform by raising Rs 3,381 crore and the market capitalization of these companies collectively stood at a little over Rs 21,566 crore. Out of 331 companies, 95 have migrated to main board.