Smart Investment tips - I

Whether we like it or not, Money continues to be the main motivator for most of the people. Since last 3 decades, stock market is one of the most promised and successful money-spinner for investors. Looking to the revived market in last week, retail investor’s confidence has grown and many started rethinking about investing again in the market. Many are still puzzled how to be careful and still earn money in the stock market. Here are few tips for investor.


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1.   Keep investment and trading strategy different

Understand the difference between investment and trading. Investment should always have long term strategy and potential growth oriented stocks. For trading, we need to listen to market information and keep eye on momentum stocks.

2.   Keep a long term view

In case of investment, you need to keep long term view. On immediate bases of short term cases, prices may get volatile but it should not affect the confidence of investor. Fundamentally strong and growth oriented shares normally gives 12 to 15 % annual return in long term.

3.   Trade at fair interval of time

Investor who is trading show not think about daily or weekly trading. They should trade at interval of 2 – 3 months by selecting good shares and proper exit limit. 8 out of 10 times, market follows the seasonal pattern e.g. rises during the annual result declaration season etc. If investor invests according to the patterns and market sentiment for short to medium term, he can earn profit.

4.   Make small but regular investment

For investor, systematic investment plan is the best possible option. Small but regular investment return can build good wealth in long term. Investor should pick the leading mutual fund and start monthly SIP. He should break his total monthly investment into 2 to 4 parts and invest in different mutual funds. SIP has given 15 – 17 % annual return in last two decades.

5.   Exit at right time

Good investor knows when to exit. In case of trading its more important to know your stop loss. Don’t hesitate booking profit or even loss. Timely exit is the key to any investment. In case of investments, investor should make an exit while he meets the target.

6.   Avoid emotional decision

In case of investment or trading, don’t go by emotions. Loved company or advice from a relative may not bring profit. Earlier profitable stock doesn’t mean the future gain, every stock has its peak and it can’t go beyond that. It’s the fundamental and profitability of the company can make a real good profit for you.

 So, investing and earn profit with cautious approach.