This article will help you to know how you should start investing in stocks as a beginner.
Rule Number 1: Do Not Invest In Penny Stocks
Penny stocks are very cheap, therefore new investors think that they can buy a lot of penny stocks and make a lot of money in few months. This is not true. Penny stocks are small companies so risk is very high here. Some penny stocks do well but its hard to know which one. Penny stocks are better avoided.
Rule Number 2: Learn As Much As You Can About Stock Markets
There are books, online websites, courses and magazines. Just read at least 10 minutes a day about investing in stock markets. This will make you a better investor.
Before driving a car you take driving lessons. Similarly you must have done some schooling to get the job you are doing now. The same way you cannot become a good investor if you do not learn.
Rule Number 3: Never Take Tips
Tips has never made anyone rich till now and will never make anyone rich in future. On top of that you have to pay a hefty fees to the tip providers – you have to make more profit than what you give them. Which means if you pay 5000 pm then you have to make at least 10,000 per month. If you are trading with 1 lakh capital then it comes to 10% a month. No one in the world has ever made 10% per month. So do not believe in tips. Do your own research and invest.
Rule Number 4: Do Not Listen To Experts on TV
Now a days there are many business channels bringing experts of the markets and taking their views. Those who listen fall for these news and take a blind call. This is not good investment idea. Nothing wrong in listening to them if you have no other source of knowledge, but before investing make sure that you know why are you investing in that company. You should not invest just because some expert in TV said so. You should invest only if you believe in the company and its future.