For a young investor, the share market is an attractive investment option. You can gain money by investing practically, but a hasty decision can force you to lose money. Even with limited knowledge, people can look forward to investing in the world share market. If you are new to the crease, a defensive approach is suggested. Adopting an aggressive approach may cost you a lot.
Below are mentioned a few share market basics for beginners. So let us understand the basics.
Understand the markets properly.
The first step to being a successful investor is to understand the basics of trading. You need to be aware of the process of stock trading in detail. All the details about trading and the technical terms are something that you can obtain via an online route or the website.
In addition to this, you should learn the art of choosing the right stocks. What are the financial statements and the basic ratios that the company calculates? Even so, you should be aware of the brokerage fees as well as the tax implications.
Be aware of your investment goals and risk profile.
This is one of the best ways to identify your investment goals. You could be looking to fund your child’s education or someone may need money for their wedding. You may be investing your money to purchase an asset.
You just need to decide the time when you need to be achieving this goal. This can be medium-term, short-term, or long-term. If you are looking to earn high returns, it is necessary to take high risks as they generate higher returns.
Investing or trading
It happens to be one of the questions of a first-time investor. The answer to this question is fairly simple, as trading requires your constant attention. Suppose you are a market expert and want to give this profession a try, then there is no harm. In other cases, it is better to start off as an investor. The moment you gain and understand the market, you can try your luck in the stock markets with a limited investment.
Shares or mutual funds
Mutual funds turn out to be entities, where the money of investors is pooled and put into stock market. For this reason specialist fund managers are allocated. The onus is on the fund manager to take decisions that is going to reduce the risk and the returns are maximized.
If you happen to be a new investor and do not have time to study about stocks, it is better to invest the money in mutual funds. Otherwise you may analyse the stocks and go on to formulate a portfolio for yourself.
The companies that have robust business and a superior brand name are less likely to suffer from losses. Though in the short term they may provide substantial returns, but it is better to park your money there for a considerable period of time. Such companies are known to pay dividend and bonuses regularly.