An investorâ€™s work doesnâ€™t end after buying stocks. In fact, itâ€™s from there that one needs to put in the most effort. If you are looking for good returns, it is of paramount importance to have knowledge about the stock market.Â
Itâ€™s apparent that the share market has become one of the most favorable investment options in our country. However, regardless of how the number of interested investors has swelled over the years, there are still many out there who claim to be clueless on the matter.
Sandeep Bikram Rana, Managing Director at ShareSansar also agrees. He says that, in his experience, many attempting to invest in stocks donâ€™t have much knowledge on the matter. Itâ€™s perhaps one of the reasons why ShareSansarâ€™s training sessions that began two years ago is still very popular. Here, Rana gives some useful information for novices interested in investing in shares and stocks.
Share market is a place where we make our money work
The main thing here is how we utilize our money. Normally on a day-to-day basis, we work and get our salary at the end of the month. In the share market, we earn by putting the money itself to work. We do so by buying stocks. When we buy stocks, we buy the ownership of the company to an extent as well. But there is a need to understand one very important thing. When we enter the stock market, it can go both ways â€“ it can work out really well or it can fail.
The first thing to consider while buying shares is the risks involved
Most people obviously enter the stock market to make a profit. However, what I see is that the majority only consider the dividends that can be earned. This can be very dangerous. The chance of suffering a loss is a reality that canâ€™t be neglected â€“ take for instance, the 2008 crash of the stock market. Iâ€™m not saying it will happen again but this should serve as a reminder of the scale of risks that is involved. So even before talking about buying stocks, we teach our trainees about the risks and how to navigate around them. Itâ€™s like when you have a large pothole right in front of you when you are walking on the pavement. There will always be a chance of you falling in it. So you need to come up with a plan to avoid this fate. This is what operating in the share market is like as well.
Define the kind of investor you are
One of the foremost things you have to do is ask yourself why you are here buying stocks. As an example, we might have a retired individual who has some savings and wants to earn a little more than the interest his bank is offering. So his priority will clearly be a secure, profitable company, especially once we consider the age factor. He wonâ€™t be looking for risks. On the other hand, we might have some investors who are looking for short-term gain so you choose stocks accordingly. Define yourself before entering the stock market. Be mindful about what you are looking for as well as your risk taking capacity.
Investment without knowledge is a very dangerous thing
An investorâ€™s work doesnâ€™t end after buying stocks. In fact, itâ€™s from there that one needs to put in the most effort. If you are looking for good returns, it is of paramount importance to have knowledge about the stock market. Itâ€™s how you can make good decisions. Anybody who wants to invest needs to understand and learn how the market functions and how you can make profit. For this, you might want to keep tabs of company prices, be updated with the analysis and latest news on matters of economy, and perhaps even take trainings when possible. Iâ€™d say it would at least take a year to understand how the market functions.
Until and unless you experience it for yourself, you will not know
As crucial as it is to gather knowledge and information on shares and stocks, nothing beats practical experience. We always highly recommend people interested in entering the market to initially invest in small stocks to gain firsthand experience. Indeed here you invest to learn. This not only encourages people to keep a close tab of the developing in stocks but also exposes them to the way the market operates. Even if you have the money, donâ€™t rush to make a significant investment. The priority must be to teach yourself first.
Market timing is key
If you are looking to invest, the first thing you have to learn to do is pay attention to the market trends. The Nepse Index reflects the average price of the market or companies so in order to make smart investments you must compare, contrast, and make timely decisions with your investments. For example, when the Nepse index is at its peak point, all the company prices increase. In scenarios like this we actually recommend new investors to wait. A better time might be when the index falls and corrects itself. These are things you will learn as you start keeping tabs of the market.
In many ways, there is no shortcut in share market. You will have to put in the time and effort to gain knowledge and understand how stocks operate if you wish to be good at earning profits from it. However, the bottom line is that anybody from any field can get involved in the share markets. Further, if you feel like you donâ€™t have the time to put in all the effort into this, there are portfolio management companies like Nabil Investment, Laxmi Capital, Kriti Capital, NIBL Capital and so on that are licensed institutions set up to help you with your investments.
As we can see, the share market is certainly getting a lot more priority now. People today understand that we need informed investors for it to grow. So we are not alone here. Other ventures like bizmandu, merolagani.com can also help you learn more about the share market in our country.