Inherently, stock markets tend to go through dips and rises as it transitions through bear and bull phases. From achieving an all-time high of 42,063 points in January 20201, to hovering in the 31,700-point mark today, the Indian stock market has seen a drastic fall of around 25% in the last few months2. Even if you are a traditional investor at core, this continuous fall over the last few months may make you consider venturing into the stock market in the hope of a rise in the years to come.
1. Bseindia.com SENSEX value reached on 16 January 2020
2. Bseindia.com. 16th Jan’20 All-time high of BSE Sensex – 42,063 points compared to 3rd May’20 closing – 31,715
One should bear in mind though, that stock market investing can be quite different from investing in traditional saving instruments. Let's take a look at some aspects you should keep in mind before taking the stock market plunge:
1. Plan plan plan!
Stock market investments are typically considered to bear higher risk than traditional investing instruments. Apply thought into what part of your savings corpus you intend to divert to the stock market and what goals you intend to fund - preferably long term goals which are 5-10 years away.
2. Get net savvy
Stock market investments today can be made on real time basis online. Invest some time in understanding your way around your online demat account so that you can independently build and adjust your portfolio.
3. Invest in knowledge
Stock market investing comes with its own set of nuances. Talk to experts or take a short course online to understand the basics of stock market investing.
4. Can Consider mutual funds
Mutual funds can aim to diversify your risk by investing across stocks. As a novice, inexperienced investor you may want to consider this route of investments since mutual funds are managed by professionals who are experts in their field.
5. Start small
Especially if your risk appetite is not considerable, you can consider starting with small investments. Opting for Systematic Investment Plans (SIPs) can be a one of the route for this.
6. Be optimistic but cautious
While stock market investing can have potential for returns it also comes with an element of risk. Mentally and financially prepare yourself for such possible volatility.
7. Don't over track
Being aware of your investments is important, but over-monitoring - persistent, daily or weekly tracking can cause you unnecessary stress due to the inherent short-term volatility of the stock market.
8. Be patient and persistent
Do not panic with short term hiccups. Persist with your investments and wait out the long term to increase the potential for growth on your stock market investments.
9. Don’t shy away from seeking help
Analysing the stock market requires expert level knowledge. Considering seeking professional help for your investing decisions.
Consistency and perseverance are the keys to successful stock market investing. Note these important beginner tips and take your first steps towards a potentially successful long term relationship with stock market investing.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.