Investing in stock market Strategy.
in stock market is risky. If done without proper research can result in loss of capital and if done smartly can multiply your capital. People make lots of mistakes in their investing in stocks. Here are some investing in stock market strategy, if you follow this strategy you will never lose money.
Investing in the stock market is risky before investing calculate the risk. Young people can take more risk comparable to that of the old age people. If the investing in stock market fails to give the return, younger people have capacity and energy to turn that loss into profit later. The question arises that how much percent of your income should go to equities? It should be as per your age. Here is the simple formula that you can follow.
started investing in the stock market at the age of eleven and he became the second richest person in the world. All the big successful investor started investing in early age. So you can start investing in stock market as quickly as possible.
The right sectors and stocks for investing in stock market
Some sectors and their . Investing in those sectors and stocks is comparatively not risky. Prefer such sectors and find the best fundamentally to in that sector.
Risk Mitigation of Investment Strategy
The political and economic problems many times even the best sectors and stocks fail to give returns. We fail to choose the right sector and stocks for investment. For minimizing the effect of loss you can follow this-
Do not invest more than 35% of your capital for the first time.
Do not invest more than 30% in any sector.
Do not invest more than 15% in any single stock.
Invest 50-70% in index stocks only.
Exit from all stocks whose weight is less than 1% of your entire portfolio.
Selling or exit strategy for Investing in stock market
When the stock is not performing as per expectation it is better to exit from this stock than reducing the capital. Generally, there are no stop losses in stock investments. The mistake that people make is that they continue to hold bad performing stock that destroys their capital. It is always better to book some loss. Now the questions arise when to exit? Below are certain situations when you should think about exiting from a particular stock which you are holding.
- Bad results for continuous 2-3 quarters
- The share price goes down 30-37% from its peak when the overall market doing great
- A continuous raising of the debt
- Company promoters sell their hold
- The exodus of top management
- Major accidents that can affect company profitability
With long-term investments, it’ never recommended exiting from good stock unless you are in urgent need of money. But systematic selling or profit booking is always a good strategy.