It is very important to know how to treat your investment in a planned manner; saving money to planning investment to earning money in stock trading.
Read these tips before opening trading account and you’ll start with a foundation for earning money in stock market.
- Use 10/Ten method to save from every income you earn. If you keep aside at least 10 percent of your income as part of a long-period of savings plan, there is a bright chance that you will have a sound financial future and be able to attain your desired earning goals.
- Make it a habit, keep a portion equal to 10 percent of every pay scale increase towards savings, it works for effectively for long-term savings such as a recurring, pension and retirement plan. If you are working in a company and have a retirement fund, your contributions towards it will increase automatically compared to your colleagues in proportion to your pay hikes. This also ensures that inflation is under control whenever it happens in the market.
- Use the “Can I take rest?” approach that most successful traders or investors prefer, when investing in stock market. An investment is always too risky if you stay awake worrying about it and take hassle prone decisions in the morning.
- Distribute your exposure in the market by diversifying your investments. Never commit to invest more than 5% of your assets in a single investment (for example, a specialist mutual fund or a trust fund such of fast selling stocks of fairly new company) or in a shell company. Diversifying your investments ensure that you don’t lose everything if one investment fails. Many traders who invested all their assets in a particular investment company in allurement of making quick gains lost everything. This happens in regulated share market very often so never put all your money in a single company.
- Take precaution. Study the sector and market deeply. Be extra cautious if you see sudden surge in stock prices of a company than what is generally seen for other companies in same sector. If they look very ambitious and unrealistic, they probably are not worth it. It usually means the investment is too shoddy and ambitious in its claims. The moment you smell its risky, you know it’s a bubble ready to burst soon.
- Choose investment avenues wisely. If you one of those investors who is confused to invest in bank deposits or on stocks then better the difference between effective rate of returns of the stocks. In 99% of the cases, you will find performing stocks giving higher dividends than bank investments. The effective earning rate is calculated by compounding the interest earned or charged reducing brokerage and consultancy fees.
- Check whether the company informs you with monthly, quarterly or annual newsletter copies giving update about your earnings. This is different from the digital updates that you will receive. It is vital that you know your historical earnings to make decisions.
- How do you determine whether you should avoid or stay invested in shares? Simple, allocate some time to learn about share market by joining online trading course. The stock trading courses teach you to follow the progress of companies over a certain of period or to track your diversified portfolio, or better invest in safe avenues of stock market like bonds, unit trust funds and/or life assurance endowment policies.