We all want to earn money through share market but 99% people fail in this share market. Failure means that they are unable to earn any money and also lose the money they have. It’s not like you’re the only one making mistakes in the share market. Most of the retail investors lose their money in the share market because of their own mistakes.
We usually spend the first 12 years in school and then 5-6 years in college to get a job. But in the share market we directly come without any preparation and want to become rich by making a lot of money.
Today we will tell you such Share Market Tips which will not only save you from loss but by following them you will also be able to earn money from the share market.
If you are a new investor and thinking of investing in the share market, then this Share Market Tips for Beginners is going to be very useful for you, even if you are an old investor, it will save you from making further mistakes in the share market.
Share Market Golden Rules
1. Avoid intraday, short term trading and trading in F&O
Many people will not digest my words. Because they think that trading makes tremendous money in less time. But it is true that intraday trading and short term trading is not less than any gambling for a retail investor.
New investors start short term trading without any hesitation and lose their money.
Estimating the short term price of any good or bad share in the share market is a very difficult task. Have you heard from someone that he got rich from trading?
Short term trading is mainly made for hedging and for institutional investors only. For a retail investor, it is a very difficult task to make money continuously from short term trading and intraday trading.
With short term trading only your broker, government and share exchange can get rich not a retail investor.
That’s why the first rule of share Market Tips says that “Keeping your money safe is more important than earning money”.
2. Always Invest for the Long Term
I have already told you in the very first share market tip that retail investors should not do intraday or short term trading. This means that you should always invest for the long term.
Now the question arises that for how long the long term investment should be done. The world’s greatest investor, Warren Buffett, said “My favorite holding period is forever.”
This means that Warren Buffett wants to buy good and keep it forever. Warren Buffett has made such a huge wealth in 50 years with a CAGR return of 22%. Today he is one of the richest people in the world.
If you had invested one lakh in MRF in the year 2000, then today their value would have been more than 31 lakhs.
In the long run, good stocks make you very good returns. So, to make money, become an investor, not a trader.
3. Avoid Free Tips and Paid Tips
Free Tips- Free tips can be given to you by anyone like your friend, any of your relatives. We have seen many such investors who buy shares in the share market simply on tip basis.
Tips can be very dangerous for your money. These tips are enough to wipe out all your money. You without knowing about any company like what business they do, how much debt they have, how much is their profit, how will they grow your money.
Paid Tips- You will find many online service provider platforms where you are given calls on the basis of subscription. They claim that they will generate 30 to 50% return on your invested money every month.
Now, one thing should come to every investor’s mind that if this is the case then why doesn’t he trade himself? What do they need to earn money by giving such calls? Whereas if they trade themselves then they will get more profit.
If everything starts happening on the basis of their calls, then all the people will earn a lot of money from the share market by subscribing to them. But in reality this does not happen.
There is hardly any person who has made a lot of money on the basis of these tips. It may be beneficial for you in the short term, but gradually it will only take you towards the loss.
4. Avoid Stock Broker’s Advice
Your stockbroker expects you to keep buying and selling shares continuously so that his brokerage becomes maximum.
That’s why your stockbroker regularly sends you free calls on mobile and email. Fortunately, calls from stockbrokers can be beneficial for you for some time. But in the end you get nothing but trap.
In this type of calls, you may gain in 7 out of 10 calls, but in the remaining three calls you will lose therefore your entire profit will turn into a loss.
5. Never trade with borrowed money or emergency funds
Many investors become very greedy when they make little profit in the share market. They want to maximize their profits by investing more capital. That’s why they put money in the share market by borrowing money from the bank, borrowing money from someone at interest or withdrawing their emergency fund.
If the prices of the shares taken from such funds fall due to any reason, then in this situation we will not be able to hold even the good stocks. Because the money invested is not ours. By doing this, we can suffer a lot because we have to pay back the loan by selling the shares at a low price.
Thus one should never buy shares with loan money, with emergency money. There is a lot of risk in this. Always invest only those money which we do not need at all in the near future.
6. Never buy these four types of shares
According to this rule of Share Market Investment Tips, you should avoid investing in these four types of shares.
(i) High Debt Companies
You should not invest in a company that has a lot of debt. Now how to know if a company has too much debt?
For this you should see the Debt to Equity ratio. If Debt to Equity ratio is more than one, then you should not do further research about that company. A company with high debt may face a lot of difficulties in the near future.
(ii) Low Promoter holding shares
How can investors have confidence in a company in which the promoters themselves do not have confidence. If the promoter holding in a company is low or the promoter holding is continuously falling, then investing in them should be avoided. You can exclude companies with minimum promoter holding of less than 20% from your investment list.
(iii) High Promoter Pledging companies
Such a company whose promoters have pledged their shares to take loans as well as the percentage of pledged shares is increasing continuously, then you should not invest in such a company.
If the promoters have made their last bet by pledging the shares of the company, then the future of that business is at risk. You can get all the information related to the promoter from the Money Control website.
(iv) 52 Low companies
Stocks with 52 week high are better to invest in than 52 week low. Even if you buy a very bad thing very cheaply, even then it is not going to give you any benefit. That is why you should avoid investing in such companies.
Correction is common in a stock, but the continuous fall of the stock is a warning sign.
7. Don’t Try to Time the Market
All the investors in us think of timing the market. But no matter how many big investors are out there, they had definitely not tried to time the share market.
Timing the market means making short term predictions about the share market. If you took a stock for Rs 100 and sold it for Rs 120 with the expectation that I will buy it back when it comes to Rs 105. But that share never came back to Rs 105. If later the same quality stock becomes a multibagger, then you will be deprived of the benefit that you would have earned.
8. Diversify Portfolio
Many investors make a huge mistake by not diversifying their portfolio. With your entire money invested in only 1-2 stocks, the amount of risk increases significantly. In such a situation, whenever one stock falls, your entire portfolio goes down.
Therefore, never invest your entire money in 1-2 stocks. Keep 5 to 15 stocks in your portfolio whose performance you can easily track.
9. Invest in Financial Education Before Investing
Most of the investors start their investment journey without any preparation. It is necessary to have good knowledge before starting investment. That’s why you should have a good idea of what things to look for before buying shares.
In this way, if you step into the share market with good knowledge, then you will not have any problem later and your chances of profit will increase continuously.
To get financial education, you can read share market books, magazines, newspapers etc.
If you remind yourselves the above-mentioned golden rules of Stock Market before starting investing, then your investment experience will be on the next level.
Many people lose their hard earned money in the share market due to these common mistakes and leave the share market forever. At the same time, they also lose the opportunity to earn good money.
If you follow these Share Market Tips seriously then surely no one can stop you from getting success in the share market.