How to invest money in share market? – (Know Step by Step)
Nowadays everyone wants to invest in the stock market because everyone wants to multiply their money. Stock market is the only medium in which by investing you can get many times more return on your money than any investment like Fixed Deposit (FD), Gold, Bond or Mutual Fund.
But when you think of investing money in the stock market for the first time, the first question that comes to mind is how to invest money in the stock market, what is the way to invest money in the stock market?
Know important things before investing in the stock market
While investing money in the stock market, investors make many mistakes due to which they have to suffer losses. Investing in ruined companies can make you lose your hard-earned money, so before investing in the stock market, consider the following important things―
1. Never invest all the money at once
Most new investors put their entire money in the stock market so that they can earn maximum returns. This is their biggest mistake. Whether the market is up or down, you should never invest the entire amount in lump sum, instead you should invest money little by little in the form of SIP (Systematic Investment Plan).
2. Diversify the risk
Instead of investing all your money in a single stock, it is better to invest in 10 different stocks. This way, even if 5 companies sink, the remaining 5 companies will give you many times more returns than them.
You should keep the biggest part of your portfolio in the stocks of large cap companies, then in midcaps and the least amount should be invested in small cap companies. This way you can reduce your stock market risk.
3. Don't fall for cheap shares
People who have less money often invest in cheap shares and investing in such penny stocks is their biggest mistake because the business of such companies is either completely ruined or the company is unable to show good sales and profit due to which the share price keeps going down and at one point you sell it and make a loss. That is why always invest money in the shares of fundamentally strong companies.
4. Learn the stock market and invest
This is the most important point. Most people make the mistake of investing money in the stock market without learning and understanding it. This is the reason why most people in India lose their money in the stock market, whereas if invested wisely, you can earn a lot of money from the stock market.
To learn the stock market, you have to first understand the basics. Invest money in the stock market only when you learn to do fundamental and technical research of the stock well.