I am investing in the stock market for the last 10 years. People often ask me this question: How to make money in the stock market? I would like to share a few things with you based on my experience. I believe that you will definitely get the right guidance from them. Making money in the stock market is not easy. I know many who lose money and finally leave, blaming this as gambling and nothing more.
Early phase, ignorance and experiment
When I had invested in the stock market in the initial stages, I did not have that much knowledge of the stock market. Bought a share at the behest of someone, the market rose and the price increased then sold it. The truth is that I only knew that I should buy shares and sell them when their prices go up. I didn’t even know what to do if prices were falling, sometimes surprisingly very much. Also had no knowledge of how to choose any company.
Listen to someone or see it on TV, I used to buy shares according to that. Some of them increased in price then I’d sell them. And when the price drops or became very low then I hold shares and don’t sell them. I’d wait that maybe the share price of this company would increase again. But, many shares are lying with us even today in waiting. First of all, I got the knowledge that by relying on what someone has heard, you can get nothing but a loss in the stock market. There may be some gain and there may also be a loss. Meaning everything depends on luck.
Investing or Trading
After many times through the cycle of profit and loss, this question has come to mind: What are the reasons for ups and downs in the share price of a company? Then I started reading the market news deeply and found that there were things related to it somewhere. But that too was not that effective, which meant that it was very difficult to predict when the price would fall and when it would increase. To be honest, in the early days I was not investing but trading, and I didn’t even know what I was actually doing.
Once someone told me that it is good to hold investments for a long time. Often the price of a stock decreases for a few days and rises again, that is, it proves to be beneficial in the long run. This is where I got to know about long term investing and also saw something from our own experience. I bought some shares, sold them after getting immediate profit. Then after, their prices fell and in the long run, as we saw after a year and a half, their value had increased by almost 150%. My second stage was long-term investing, or in my own words, just investing.
The next stage was the question: how to find out which company would benefit from holding it for a long time. Who knows what will happen after 5 years from today. Once again it seemed that everything depended on luck. No one can tell what is going to happen after 5 years. Is long-term investing a myth? feeeew…no answer again.
I consulted some investment gurus on the internet. And after reading a few books on the subject, I came to understand the basic funda of any stock. This made me understand that, how do people who actually make a profit from the stock market, earn a profit. Here I came to know about multi-bagger stock i.e. a stock you invest in today, it can be 10 times, 20 times, or even 50 times after 10 years. Now the question was how to find such a company which can be multibagger in coming days?
Finally, I understood what investing is. I understood that investing in the stock market is sailing a boat in the sea, if you do not have the right information, then you are sure to drown. Reading a few books made it clear that the more you read, the more information you can gather, and the more you can understand the market. The final conclusion was that as much as has been learned till date, sometimes by losing or earning, by using that knowledge, keep investing and keep learning as much as possible in future because there is no end to knowledge.
What You should always keep in mind
Never invest on what you hear and watch in TV news. If this sounds like an exaggeration to you, then sit on it and consider that if all the experts were really experts, they themselves would be billionaires and not sitting and sharing knowledge on TV. All I have to say is that every man has his own point of view, a way of analyzing, and his understanding of concepts. So do an analysis on the basis of your understanding and find out the right company in which you get more profit by investing.
Forget invested Money
Forget the investments you are making. By forget it does not mean here that you forget it at all. It means that you should remove it from your normal expenses or daily needs budget because there is no limit in how much time you will get the right return. If suddenly you have a need and you withdraw money, then you may have to withdraw money at a loss, while after a few days that stock is going to give you huge profits.
To invest for a long time you should make your budget for investing in such a way that you will not keep that money for any other purpose. You keep that money only and only in the stock market.
Whenever you take a decision, do not make it on the basis of your emotions but on a logical and mathematical basis. Understand how good the fundamentals of a stock are, how a company is progressing and its future, and then invest in it for a long time.
Invest in yourself
There are many books on the subject, and some experts even say they read over 1000 books about investing. Invest in yourself, it’s really magical.
Obviously, you will not read all of them in one day nor will you wait to start investing after reading all those books. Rather, start investing based on whatever information you are getting; whatever money you have. Do not put it in one place, but diverse it. If there is a mistake, the risk is minimized and learning not to do so becomes too easy.
Keep investing on the basis of your knowledge no matter what mistakes are being made. Until you do you will not know what is really going wrong. While correcting those mistakes before the next investment, keep making your portfolio better.
It’s all about Happiness, Freedom & Prosperity.