The main motives of every investor is to gain huge profit in short period of time in share market. The larger investor or smaller investor, financial goal of them is to earn more in quick period. Every investor has a dream to make huge amount of profit in stock market. However, earning in stock market is not as easy as we expect. Sometimes the dream of making huge profit result to lost their wealth in stock market. The main reason of loss in stock market is improper knowledge about investing in stock market. One need to have complete knowledge about rules of investing in stock market before investing their saving of hard work. There are no any such shortcut or formula that you can earn huge return from share market. The only way to earn return in share market is follow the rules of investment.
There are some of the rules of investing in stock market. In order to gain success in stock market, it is essential to know and follow certain rules of investing. Always remember the eight golden rules of investing before putting your money on stock market. The major eight golden rules to become successful in share market are presented below:
Take informed decision:
The proper research should always be undertaken before investing your money in any stock. Many investor in Nepal seems generally invest by the name of a company or the industry they heard or know. However, this is not the right way of investing in stock market. Investor should collect proper information about company management and performance.
Diversify your investment:
There is saying in share market “Don’t put all your eggs in one basket”. This means don’t invest your all fund or money in one stock. Always try to diversify as much as you can to lower your risk exposure.
Invest in business you understand:
Never invest in such stock that are out of your understanding. Always focus on investing in business or industry you understand. In simple words, before investing in a company, you should know what business about is it.
Don’t make your judgement based on emotions:
Many investor have been losing money in share market due to inability to control their emotions. Emotions such as fear and greed leads to loss of money in stock market. The greed of investor after hearing the stories of fabulous return being made in stock market in a short period is the example of making emotional judgement for investment.
When you are investing in stock market, you cannot have a short-term goal or strategy for investment. The risk is very high while investing for short term, as many investor have lost their fund or money while investing for short-term. If you don’t want your money to be lost then focus on investing for long term. In long term goal, stock markets earn better than any other instrument if you take a time of 10 years or more.
Focused on Values, Not Price:
In stock market, you should pick stock based on their values. This process of investing based on values is known as value investing. Always go through such stock that are undervalued, these stock lead you to earn huge return.
The key factor to earn optimum returns on investment with minimum risk is to create portfolio and continuous review. If you don’t review your portfolio regularly, you could end up losing money in stock market.
Buy Low and Sell High:
Good investor always follow market sentiments of ‘buy low and sell high’. This method can be successful when everybody is selling you should be buying. Every fall should be a buying opportunities for you. It is a tough thing to do but once you achieve it you will make a huge amount of money in the stock market.