9 Tips for success of stock market investors

1. Never invest borrowed money

If you invest borrowed money, it is very tough to get real gains. Your real gains will be the left over money(if any) after you repaid the borrowed money with interest. Only few lucky fellows may find success with it and for others it will be a night mare.

With borrowed money, you don’t have freedom to leave the investments for long term. Even small things in the market leave you panic and you will end up with wrong decisions. Always, invest the money which you feel won’t impact your life even if you lose it.

2. Do your own research

The first thing to avoid is depending on the tips you get from brokers, colleagues or so… There is nothing wrong with listening to the tips, but if you make decision without doing analysis from your side then don’t blame them if you get negative result. It is your responsibility to make the decisions on your own understanding. If you don’t have time and knowledge to do the research on stocks, better go for mutual funds.

3. Buy in bear market, Sell in bull market

It is a dream of every investor and take resolutions to follow it when everytime they lose money, but rarely stick to it. Most of the invetsors end up with buying in bull market and selling bear market. Only a few who have guts to buy in bear market and can wait get the fortunes. Buying in bear market seems to be a simple thing, but when overall sentiment in the market is negative, it is very hard to take the wise decison.

4. Diversify, but not too much

Diversification strategy says "Don’t put all your eggs in one basket". It is always advisable to diversify your investments into a portfolio of selected number of scrips. But don’t diversify too much.

With over diversification, you hardly get any money. Stick to a few selected scrips which you believe can get you good returns and wait till your time comes.

5. You really need to think ‘long‘

Many say, long term investment strategy works. We agree, but what should be the time frame for long term investors ? some say, more than a year or two and some up to 5 years. For us, we don’t have any time frames. If you understand the scrip thoroughly which you are going to be invested in, then if it requires only 6 months to get most out of it or a decade to make a fortune out of it, it doesn’t matter.

Based on your comfort level with the scrip your time line may vary but your commitment to stay with scrip till you get the expected result is what differentiates the long term investors from the crowd.

6. Develop your own strategy

This is not only for the long term investors even for traders also. A strategy must be there on how/when to entry and exit the scrip. Just don’t follow others strategies, just look at them and customize it to your own needs. Your investment strategy should be simple, easy to follow and you understand it ‘in and out’ of it. Make necessary changes to your investment strategy whenever necessary based on your experience and observations. Without a own strategy, it is hard to get success in share market

7. Fundamental analysis works

Know the basics of stock market. Give some time to understand the investment concepts, process of how stock market works. Read about how to research a company, how to understand the balance sheet of the company etc.

You no need to be a regular reader of economic times but try to know the things like how budget impacts your investments. Most of the time, we give time to dream about our investments growing multifold but don’t really understand what factors impact our investments.

8. Don’t panic over small stuff

If you are a long term investor better don’t be fooled by so called stock market analysts, brokers or whosoever. They quite often create either unnecessary hype or panic which hardly happen.

Observe the things with open mind, when you really think some thing is really going to happen, take a wise decision but stay away from day to day hypes and panics created by media.

9. Does age matter ?

Share market investments are for wise men but not for others. Many say, starting investment in the young age is advisable as they can take more risk. May be, but if you are young why should you take more risk ?

Risk comes into picture when you don’t understand the things clearly. Even if you understand, some times the things may work in the other way. The difference is the ‘level of risk’. Take calculated risks.

We feel that if you understand the things properly it doesn’t matter whether you are in teens or in nineties. You may not agree with our opinion, but think… What is the age of warren buffet ?

Disclaimer: The above discussed points are our personal opinions. There may be many exemptions whatsoever. Please consider them only after your own analysis.