Stock markets at first seem to be an easy place to make tons of easy money without any tangible effort. Everyone think themselves to be no less than warren buffet with an ability to convert pennies into million within short span of time. That can certainly happen if you got that golden luck but truth is far from what we can ever dream of. There is a blood everywhere in Wall Street with shattered dreams scattered all over the place. It is be gamblers paradise in which the hit rate is way too minimal. But within this uncertain environment there are breed of people who do make money in line with wealth that warren buffet has created. These people are the ones who know How to invest in the stock Markets. These people are not gamblers or traders and are not out there to try their luck. These are the last man standing with profits irrespective of down or up markets. These are the people who emulate Warren Buffet in reality. These people are called Investors.

There is difference between trading and investing which only few people can comprehend and actually put in real use. Traders try their luck but investors invest money with sound logic and facts supporting their decisions. Vision, hard work, patience, discipline are some of traits which investors posses that make them shine out. Investing is like growing a tree whose results cannot be derived immediately or in short span of time. The people who have mastered the art are the people who give due respect to money. Yes, investing in an art which need to be mastered and requires lot of hard work. It is not easy to multiply money but it is not difficult either if you follow the 10 steps related to investing. These are the steps which need a lot of care at every part and you need to give your best. Learn about them, master them, and stock markets would start to dance to your tune. Profits do come and they come in abundance provided you have the patience to earn them through brilliant Stock Picks. These steps if followed wisely would definitely make your money work hard for you.

1)     Understand Markets-Big Question, Do you understand markets? Yes, stock markets are not bunch of flashing tickers or some favorite companies which your friends recommend. They open close and operate in certain manner. They have some rules like circuit filters, price, stop loss etc. There are events which affect stocks like dividend, bonuses etc. It is always helpful to understand markets and know the rules of game. The more you know about them easier it becomes for you to take sane decision.

2)     Understand Your Profile- What kind of investor you are? What is your risk profile? How much money you are willing to put in the markets? Do losses disappoint you and spoil your mood. These questions are very important. Almost every other financial website helps you understand your profile. Try them and understand yourself much deeper. As a thumb rule it is always wise to invest spare money in stocks for long term. Borrowed money invested for short term always exposes you to greater risk.

3)     Diversification- it is not wise to put your all eggs in same basket and in same manner it is not wise to put all your money either in one stock or even in stock markets alone. If you got money to invest than it is wise to spread your risk across different sectors which you feel confident about. By this your investment would never get stuck at one place. On other front investing your money only in stock markets is not a good decision. Real estate, debt, bullion, commodities etc are other places where you can invest and contain your risk.

4)     Research- How do you zero in on which stocks to buy and which ones to avoid? Most of the people get tips from brokers, friends, magazines, tv shows etc. They might not know anything about the stock but still they are more than willing to bet all of their money into one stock just because someone strongly feels about it. The end result is a disaster. It is very important to know about the company where you have decided to put your money. Do your own research, set you own standards, increase your own knowledge. It may be hard initially but soon you would start to get knack of it. Reading about famous investors and their investing style also offers a great help.

5)     Investment Goals- Establishing your investment goals and planning your investments based on them is one of important step which is often ignored. If you need money at some point in future than it is important to plan for it today. An understanding of your investment goals would help you  put your money at right place and in right quantity.

6)     Investment Channel- Once you are all set to put the money be very careful about the broker you choose, the service they offer, the charges they put, penalties or any other finer points. Make sure talk about things which they are not comfortable to talk about. While services have improved a lot recently but they can be a big hindrance in your way to profits. Reputation of your broker is an important aspect and one need to make sure to get best possible deal in every way.

7)     Understand the Risks- Once you put your money in a particular stock you become a part owner of the company. Your position is no different from big shareholder of the company.  Investment made in stocks for short term and with big profits in mind often disappoints. It is important to understand the time frame of your investment and your expectation about the performance of the company. Investment in stocks is marred with risks and you need to get better of them.

8)     Portfolio Tracking- Churning your portfolio too quickly or sitting on it for too long can prove disastrous. Companies go through different cycles spanning years and it is always wise to go with the trend. Some people are too restless that they buy and then sell stocks within short span of time while there are others who completely forget about their investment. Tracking your portfolio and making necessary and wise adjustments are part of sound investment decision.

9)     Returns- Be very clear about expectations of your returns and the time frame you have considered for it. Don’t get swayed by daily movements and always keep eye on the returns and the target time you have given for your investment. Have patience and give time to your investments to mature. Set realistic expectation of returns and always be prepared for next step

10)Taking Profit off Table- Lastly, An important step that results in generating profit or avoiding loss from the investments.  People have the habit to either sit on a loss with hope of recovery or seeking more profits even when they have achieved their target returns. Despite doing everything right at the first step they flounder at this step and consequently lose any amount they have made in all these years. When you see profit on the table and it has served your desired goals than quietly take them off from table. After all something is always better than nothing.

I have done trading and have lost heavily in it. But since the time I have started to follow the above rules my portfolio has always looked healthy. Even in recent downturn my losses were limited and it quickly came in green the moment market reversed its trends. As a result not only I am having a nice sleep but my money is also working as hard as I have been working for it. Clearly it has given me true meaning of investments and has made me to respect the stock markets. So if you still have question on how to invest in stock markets then these 10 steps would certainly give you a direction. Good Luck and Go Rock the World.

Photo Credit- Slaff

Incoming search terms:

• how to invest
• 10 steps to becoming a master small-cap investor
• steps to invest your money

No related posts.