Today, we will discuss some thumb rules while Investing in various asset classes like Stocks, Real Estate, Debt, etc. Keep reading and you will be a lot wiser till the end of this article.
If you don’t think why to save, read this How to become Rich?
People use jargons like Fundamental Analysis, Margin of Safety, Volatility, etc. to show their expertise in this field of investing. I promise you, this article will be different. We will use simple vocab to get our message to reach your head.
To get basics of Investing clear. I recommend you to read this Investing is way easier than Rocket Science! Let’s move forward if you are clear about saving some money and the basics of investing.
These are general rules which can be applied to all the asset classes (i.e. Stocks, Real Estate, etc.) but just for the sake of ease in writing, I will use stock market in my explanations.
To get a basic idea about the Stock Market, read this article.
Don’t Trust Free Advice
In the investment world, Big Guys spread a lot of propaganda regarding certain stocks. They use these opportunities to load or unload a large number of stocks. to Think of it like the political scenario where parties spread fake news to get more votes.
There are strict regulations and guidelines issued by various agencies but still, it is possible that you will encounter Buy or Sell tips. Never Trust them.
No one can tell you about a multi-bagger stock because no one can see the future.
Keep Eyes Open while you shop
The best way to find a good company is to Research while you shop. This method was introduced by a successful fund manager. The idea is to find value in the stocks we are buying. While shopping, you should look for good products. They automatically turn out to be good stocks in the long run.
Maruti, Dabur, Emami, Bajaj, etc. are household names in India. Everybody has some idea about them. They all are actually good stocks too. So, you should invest in companies whose products provide value to our lives. Take it as your responsibility.
Learn to Analyze
It’s simple. If something provides value to its customers, then it must be selling. So, if it sells then it should earn money for its manufacturer. In other words, companies having good products have good financial condition. When you analyze their financial statements, there shouldn’t be any red flags.
Never invest in something about which you have doubts. There is a lot of things you can do with your money. So, better spend it than investing like idiots. That’s why a healthy analysis is very necessary to get you going.
Reading good books taught me the value of analysis. They can also help you.
So, you have found a wonderful company and your analysis proofs that it is safe to invest. Then, you finally got over your urge to spend by buying a good number of stocks. Say, after a week, your stock is 10% down. But there isn’t any valid reason for it.
Now what? Simple Answer – Stay calm. Get away from the market. Enjoy your life. Surf around our blog. But don’t sell now. Be disciplined. These type of Ups and Downs are common in all the markets because people have a herd mentality. Read our guide to stay stress-free here.
Follow the Herd
Why? Doesn’t matters how much great product a company manufactures or how good is its financial statement. Its stock won’t rise until people start buying it. Similarly, the stock of a bad company will keep rising until the last investor has bought it.
So, the wisest thing is to watch the herd. If it’s getting wild behind a bad company, then stay away and if nobody is giving a fu*k to some good company, then get interested.
Everything is done. But, my stock isn’t moving. How can this happen? Lad, as I have already explained, this all is based on the herd mentality. So, stay patient. Sooner or later, your stock will start rising and you will also be a rich investor. Till that time, just wait. Patience pays.
That’s all I have for now. Follow this. Try to hit something worth investing. It’s not easy to get a good investment. Luck Matters. So keep trying. Someday will be yours.
Investing can’t be fruitful without a proper financial plan. Learn to plan your financial goals in this article.