20 Simple Do’s and Don’ts of Investing in Stock Markets

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Written By Adeyemi Adetilewa

With a trading or Demat account, you are more than ready to start investing in the stock market.

But the real challenge is about to kick in if you are a newbie or beginner in the process. Everyone’s final goal in the stock market is to make big bucks, but how are you going to accomplish this objective is the real key.

With knowing your operations, you also need to keep a tab on your dos and don’ts while investing in the stock market. Before you venture into investing, make sure you know it all. 

Let us look at some of the dos and don’ts of stock marketing before you start investing.

The Dos of Investing in the Stock Markets

1. Educate Yourself

Investing Big in Stock Markets? 20 Simple Do's and Don'tsIt is a mandatory thing to do when you get into the market. If you still do not know how the market works, you might be in some big trouble.

And if you want to become a successful stock investor, you need to start learning the basics of the stock market which could start from as basic as stock market timings, and make sure to never miss out on anything.

It does not mean you need to take up a course or go to college for this. All you need to do is to self-educate yourself in the best way possible.

There are tons and tons of free information available for you to access on the internet. You can learn the market from inch by inch and strengthen all of your pain points. 

2. Always Begin Small

Do not jump big when you first start. It is like trying to deadlift 100 pounds when you have just stepped into the gym. Just like that, when you begin to invest in the stock, start small.

Invest the lowest amounts possible and gradually increase these investments as your experience, knowledge, and insights on the market begins to grow.

3. Start-off Early

You need to emphasize getting started soon with your finances. Time is always in your favor if you start your financial ventures sooner.

Moreover, the losses you make at early times have a better chance of recovery. 

4. Always do your Research Before Investments

Research is essential at any point or any operation and the most crucial before you can start investing. One of the biggest reasons why a lot of people do not make money from their stocks is because their initial research efforts were absent.

Every investor needs to know where his road is leading him before he starts his journey. It is more like research on the company, the history, and the future. You can know more about the company’s fundamentals, ratios, probability, and so much more.

5. Invest the Surplus

Use the money which would not impact your lifestyle. Here is why, as the stock market gives you a wide range of opportunities to invest in companies that you are fond of, there are still a lot of chances to face risks.

Sometimes these companies may fall for years, and you would never know. So always invest with what you have in surplus to make sure you do not hurt yourself by believing there are assured profits.

6. Have an Investment Objective

Investing Big in Stock Markets? 20 Simple Do's and Don'tsWhen you have a goal, it becomes easy to plan your investments. You may be working towards a retirement plan, and investing based on those requirements is much simpler, rather than randomly going in for investments.

7. Build and Expand your Stock Portfolio

Making good and consistent money does not come from just having one or two stocks. You need to build for yourself a winning stock portfolio of 8 to 12 stocks that will give you reliable returns for the long run.

8. Average it Out

Average out your opportunities and risks. It is challenging to always buy stocks at the bottom and sell them at the highest point. But if you have done it before, let us say it is a game of luck or averaging it out.

9. Diversification is Key

Never put all your eggs in one basket! You have most probably heard this before, but it makes complete sense when you are wanting to be a skillful stock market investor.

There are risks involved in being an investor. So, make sure you have not tight all of your shares to one pot. So even if one share drops, you always have another elsewhere that is picking up.

10. Invest in Long-Term Views

Did you know Jeff Bezos, the richest man on earth, holds the most shares compared to anyone else?  He has always been subject to thinking long-term.

When asked in an interview he said, he looks at everything in a three-year aspect from now. Without a doubt, long-term investments help build wealth. It is due to the power of compounding in the long term. So, make sure you have a view for the future.

11. Be Consistent

Investing Big in Stock Markets? 20 Simple Do's and Don'tsMost people make the mistake of getting excited and entering the stock market when it is doing well. But there are two sides to every coin, and if it is doing well right now, we don’t know when it might fall.

But if you enter when the market is high and exit when it is down, you might knock out some great opportunities waiting ahead for you. Make sure you are always there to make good money from stocks.

12. Be Patient

Returns take time. Most stocks take around a year or two to show your return rates. Your performance is more likely to get better when you give it more time.

The Don’ts of Investing in Stock the Markets

1. Do not Take Investment for Gambling

Investment is not a game of luck. Do not buy a random stock, and then expect it to give your fortunate returns. That does not work here. 

2. Blind Investments are Never Recommended

The moment you open your trading or Demat account, you get messages and notifications on buying and selling. But it is never advised to walk forward from blin advice.

3. Never Have Unrealistic Expectations

Remember that there are a lot of things you need to keep in mind to make the best out of your investments, such as share market timings, company fundamentals, and more. So make sure it is a lot of work, and success does not come overnight.

4. Do not Over Trade

Make decisions only when it is necessary. Remember, when you are frequently buying and selling you pay off a lot of brokerage and other charges that will cost you.

5. Do Not Follow the Herd

Investing Big in Stock Markets? 20 Simple Do's and Don'tsBefore one of the sheep might seem like a preferable and go-to option. But it is not always the best decision.

Do not invest or sell stock from a company just because a lot of others are doing it too. Do it because it is valid, and you have done your research on it.

6. Avoid Biases

Do not stick to a particular stock or company just because you favor it or because it is of your likes. Make practical and methodical decisions in the stock market investment procedures.

7. Avoid Unnecessary Risks

Investing all of the money you have to get the highest of returns is not something you would want to do. Your risk and profit ratios must always be at a balanced rate.

8. Never Work on Emotions

Do not decide because your gut says so, but make a decision because you have proof that is what will work for you, or you have done your research to support the move you are about to make.

Bottom line: Investing in Stock Markets

This article has covered the major do’s and don’ts of stock market investing, and you might want to consider each one of them before you could jump into being a successful investor.

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