Bank Stocks Investing
Bank Stocks Investing
How To Start the Journey of Stock Investing
Many newbies are confused about stock investing. Some gurus advise you to buy and hold; others tell you to buy and sell. Which is the best strategy? What should a newbie do in order to benefit from the market? Well, if you are puzzled with these and other questions, then here is your guide to market investing.
First, if you are new to investing, read as much as you can about how the stock markets work. Read books written by eminent investment experts like Warren Buffett, Benjamin Graham, and the like. This will give you an idea of how to start investing.
Then decide how much you want to invest. While it is alluring to put in a big sum, so as to reap big rewards, avoid it. Instead invest small sums to buy stocks. Invest only that money which you can afford to lose. This is the principle used by famous investor Warren Buffet, who says he buys stocks on the assumption that the market will be closed for the next 5 years. Also avoid taking loans to buy shares. Remember shares are a volatile asset class. Now if the market crash wipes off the value of your investment, you’ll have trouble repaying your loan.
After you have decided how much you want to invest, select companies to invest. Always go for companies with strong fundamentals and good reputation in the market. Choose blue chips like HDFC, Tata Motors, Bharti Airtel over small and midcap companies. This is because blue chips are always liquid, meaning you can always sell them if need be, and recover your money. But this is not possible in case of small and midcap companies as they may not have many takers. So you’ll be stuck with them for a long time.
Then stay with these investments for a long time. Whatever the market condition, don’t lose sight of the fact that your time in the morning is more important than timing the market. Never forget the fact that market works in cycle. What goes up will come down and vice versa. So if the market condition is bad, don’t panic and sell. Instead use it as an opportunity to buy more quality stocks. Think about it as distress sale, where quality stocks are available at a big discount.(Find out about Bell Direct. Also make sure to visit easy steet.)
If you are a tax payer, consult an accountant and find out about the effects of dividends on your tax liability. Remember dividends are income that you earn from your investment. So it is essential to check out its effect on your tax liability, in order to avoid paying undue tax.
Choose 10-15 good quality stocks. Any more and you’ll be confused about keeping a watch on their performance. Also avoid going overboard on the same sector or company. E.g. HDFC Bank, Axis Bank, Bank of Baroda are all good stocks. But they belong to the same sector-banking. This means you have taken excess exposure to the same sector, and so your portfolio is prone to weakness when this sector crashes.
These are some simple tips to help you get started on your market journey Happy investing!
Battered Bank Stocks Could Pay Off
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