The stock market can be a life-changing place. But only if you are able to find the best stocks to invest in and more importantly, invest a sizeable portion of your investible surplus in such stocks. If you can manage to do that repeatedly, you can create enormous amounts of wealth.
But that is easier said than done. More so for those who are just starting their journeys to invest in stocks.
So let’s discuss few important things that new investors experience:
1 – It’s not a One-Direction Journey
Irrespective of how markets have done in recent past, they are destined to be volatile and can go in both directions – up as well as down. Many newcomers commit the mistake of exiting the markets just after experiencing few initial losses. As a new investor, you should remember that it’s normal for markets to rise and fall and for the long-term investments, this volatility doesn’t matter much.
2 – Have the Right Investment Goals
Do not try to beat everyone in the markets. Invest in stocks with reasonable expectations in line with your risk appetite, financial profile and financial goals. Taking an approach that is aligned with ‘your individual goals and risk profile’ will help you stick with the chosen approach for longer.
3 – Focus on the Correct Strategy
At the start, you are sure to be fascinated by stories of people doubling their money in few weeks or even in days but such stories are rare and exaggerated. In reality, long term investing works better than short term trading. Chances of losses in short term are higher. So stick with an approach that has a higher chance of success and which focuses primarily on investing in the best stocks to invest for long term.
4- Stay away from Tips, Derivatives and Day Trading
All these are approaches to make quick profits from market fluctuations but in the long run, most traders following these methods end up making losses. It’s better to focus on long term and only invest in stocks of fundamentally sound companies, after doing thorough research and analysis.
5 – Don’t be Emotional
As a new investor, you will experience a lot of emotions due to fluctuating stock prices. But don’t let your emotions control you. Don’t sell just because a stock is falling and you are feeling bad. Don’t buy just because everyone else is buying. Your buy and sell decisions should be based on sound strategy and not your emotions.
6 – Review your Investments Regularly
Not all your stock picks will do well. Sometimes, you will have to sell those that are not doing well and replace them with companies having better growth prospects. So reviewing your investments regularly is necessary.
7 – Have Patience
Creating wealth by investing in stocks takes time. So unless you are patient, you will be unable to stick with a strategy for long enough. So don’t expect magnificent results from the very first day. At times, you may lose money too but have patience and persist with a long-term view.
8 – Start small
Since you are just starting, take baby steps into equity markets. As your learning and experience grows, you can commit larger sums of money.
9 – Find the Right Advisor
A competent and trustworthy investment advisor can handhold you during initial investments. Right advice supported by strong market research (about best stocks to invest in) at the right time has the potential to help you invest profitably.