Most people are slightly hesitant when investing in the stock market. A big part of their concerns, and in fact one of the most significant obstacles for most new investors, is their own fear.

A question may arise in your mind. Why should I learn the stock market? You may be a student or a young professional or even a retired person. Whatever your position or age, you may have few dreams that have to be fulfilled. And for that, you need the appropriate amount of money at the appropriate time meaning that you have to start investing. There are numerous financial assets like stocks, mutual funds, derivatives, currency, commodities, bonds, etc. With educated investment in stock markets able to give double-digit returns in the long term. There are various strategies used to accomplish an active Investment and trading in the Stock Market.

The Stock Market investment involved many national and international, economic, social, political factors along with individual risk bearing capacities and financial goals that are subject to change from person to person. Hence it is important to understand how each and every factor be it economical, social, financial, political, etc will affect investments in stock markets so that one can make wise investment decisions and create wealth.

There are some basic principles of Investing Stock Market

Don’t Follow other Investors Blindly

Don’t blindly imitate the investment decisions of other investors who may have profited from their investment decisions. It is seen that most of the new investors easily get influenced by the decisions of their acquaintances, neighbors, or relatives. This strategy can backfire in the long run. Remember, even the world’s greatest investor Warren Buffett, once said that he made a huge mistake by investing in a particular retail major.

Do Your Research

Do proper research on the stock you are planning to buy or sell. Do go with the name of the company or the industry they belong to. After all, it’s your hard-earned money and you would not want it to go waste. Knowing all the details of your stock doesn’t guarantee success but at least it can help you make better and more well-informed decisions.

Don’t Invest in What You Don’t Understand

The first question you should ask what the company does? Do you understand business? Warren Buffett once said that he doesn’t invest in what he doesn’t understand. If the investment genius is himself acknowledging that he doesn’t understand all companies, we should all probably take heed.

Discipline in Investment is The Key

The share market is subject to volatility. The key to sustain in this volatile market is to buy the right stock at the right time and hold on it patiently for outstanding results. Warren Buffett also suggests that the right way to invest is to “buy good businesses at a fair price with the intention of holding them forever.”

Control Your Emotions – Greed or Fear

One of the main reasons to lose money in stock markets is the investor’s inability to control their emotions, particularly fear and greed. The stories of big returns being made in a short period of time are what makes one greedy. A greedy investor may invest in unknown companies or business without understanding the risks involved and would lose their money in case the market reverses. Same way, investors panic and sell their shares at low prices when the market falls. So, it is better to make informed investment decisions instead of thinking emotionally.

Diversify Your Portfolio

Diversification of portfolio won’t ensure gains or guarantee against losses but once you choose to target a level of risk based on your goals, time horizon, and tolerance for volatility, diversification may provide the potential to improve returns for that level of risk.

Set Realistic Expectations

Every investor hopes the best return from their investment and there is nothing wrong with it. However, unrealistic expectations can leave your finances in a mess. Return expectations depend on the investment portfolio. As a general rule, the higher the risk, the higher is the expected return.