The enticement of big sum of money has frequently point investors into stock markets. In reality making such money in terms of equities is not that easy as you think. It does not require the oodles of discipline and patience, but it has also great deal in terms of sound understanding and thorough research in market and its environment.
In addition to the information above, stock market has become unpredictable in the fast years, in which this has left many investors in state of bewilderment until this moment.
They are still in the period of dilemma whether for them to invest, sell or hold on their stocks in the hard situations.
Honestly, till this day, there’s no such sure shot formula created that will guarantee sure success in stock market, but we have found these golden rules and if these are followed, it will increase the rate of success in getting good returns with your investment.
1. Avoid Herd Mentality
Basically, the buyer’s decision is greatly influenced by actions shown by his neighbors, relatives and acquaintances. Thus, if people around you are investing on a certain stock, the higher tendency for the potential investors that will do them same track. But to tell you, this type of strategy will backfire in the future.
Obviously we are directly telling you to avoid the herd mentality. This is if you do not want to get a higher chance of losing your hard earned money invested in the stock markets.
You need to be very careful and extra fearful because there are greedy people around the corner, in other terms “be greedy because they are fearful”.
2. Don’t time the Stock Market
Many of stock market experts remind newbie not to time stock market, though most of them shall we say “the experts” don’t have a strong view on price levels appropriated to the individual shares.
Most investors however are doing the opposite thing, something that the financial planners have been forewarning its client to avoid, and thus for them to get higher chances of losing their investment in the long run.
In short, you should not try to time stock market. For the record, nobody on our connection has done this successfully over a multiple business and cycles in the stock market. Catching Bottoms and the tops will always be a myth. And these we believe will remain till in the future. In fact, when people are doing it, they are losing money than getting money on it.
3. You Need to Have a Well Disciplined Approach in Investment
For the record, we have witnessed that even bull runs show its panic moments. This is similar to stock market. The volatility in market has inescapably made most investors lose their hard earned money despite of the bull runs.
In the other hand, those investors who put their money in a systematic way, meaning in the right market shares and held on their investments, patiently seen to be generating extra ordinary returns. This is because, it is wise to maintain discipline and patience in your investment approach and keeping your long term picture on it.
4. Your Judgment should not be based on your Emotion
Based from experience, many stock market investors have been losing their hard earned money in the market. This is due to inability to manage their emotions, in more particular this is due to greed and fear. In bull market, your lure to rapid wealth is very much difficult to defy.
Your greed augments in time when investors hear unverified stories on fabulous returns that has made in stock market in just a short time. Hearing these stories leads to speculations for them to buy shares on unknown companies or those who have heavy positions in future segment without clearly understanding the possible risk involved in it.
So instead of having wealth in it, these investors who followed their emotions thus burn fingers badly in sentiment as market reverses. In bear market, investors sometimes panic (specially the newbie one) they then sell the shares they have at bottom prices.
Remember that both greed and fear are worst emotions in term so investing, and it is way better for you to control them or not guided by those emotions.
5. Have a Practical Expectation
We don’t see any wrong for an investor hoping for best results from the investments they have started, but we can say that you are in trouble if the financial goals you have are based on assumptions (unrealistic one). For example, there are many stocks generated during the Bull Run in the past years.
However, this does not mean that as investors you will always have the same amount of return from time to time on you stock market investments. Therefore, earning greater than 12 percent in the stock market is pure dumb luck and for sure people are going to laugh at it, you are then just inviting people for trouble.
6. Use Only Surplus Funds when Investing
If you still want to take the menace in an unpredictable market, then we strongly advice that you should have a surplus funds that you can accept if bad things happen along the way.
It is not that necessary that you will surely lose your money in the scenario, but what we mean here is that, losing the money invested will not affect your life. Remember that your investment might give you enormous gains in the next months.
But that idea is not sure, but a higher chance of getting it when things are done right, this is the reason why you need to take the risk.
7. Monitor Meticulously
Always remember that we are now living in a universal village. And any event that could happen in any portion of our world has impact in the financial markets. These means that events could happen anytime, therefore we need to monitor our portfolio constantly and keep updated with the possible changes that may happen.
If reviewing your portfolio is not that possible due to lack of understanding, then we strongly suggest that you should ask help on a financial planner or a person that you believed capable of doing those things.
If you can’t do that, therefore investing in stock is not really for you. It is way better to put your hard earned money on safe or less risky type of investments.