1. Select the right company – Choose profitable and better company that has earned at least 20% profit on the shareholder’s capital.
Ideally, a long-term investment (over 5 years) allows you to participate in the company’s development.
The performance of shares in short duration (3 to 6 months) is less than the company’s original theory and motivates more than market prices. While the relevance of the right price decreases in the long run.
2. Be punctual – investing in a stock is a long learning process, in which you learn from your mistakes. These are some facts that can make this process easier.
Diversity in investment – Do not exceed 10% of your fund in any one stock even if it is a gem, on the other hand, do not invest in too many stocks as it is difficult to monitor them. For a less active long-term investor, 15-20 different stocks are good numbers.
Use this asset allocation tool to find out if you need to make additional investments from shares.
Keep analyzing your company’s performance with its quarterly results, annual reports and news articles.
Find a good broker and understand the settlement system.
Do not pay attention to the hot tips because if it really works, then we all are coronation partners.
Avoid temptation to buy more because each purchase is a new investment decision. Buy as much as shares of a company as per your total allocation plan.
3. Monitoring and review – Regular monitoring and review of your investment. Keep an eye on the announcement of the results of the quarterly results of the shares and at least once in the week, keep improving the share prices on your portfolio worksheet. This work is more important for the unstable time when you can get a better opportunity to choose the value.
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Apart from this, also check that the reasons for which you had purchased the shares before, are still valid or there have been significant changes in your earlier estimates and expectations. Also adopt an annual review process so that you can check the performance of equity shares within your total asset allocation.
If necessary, you can review at RiskAnalyser because your risk profile and risk capacity can change over a period of 12 months.
4. Learn from mistakes – Identify and learn from your mistakes during the review, because no one can beat your own experience. This experience will be your ‘pearl of knowledge’ which will surely help you make a successful stock investor.