An Advice for New Investors in Share Market

A lesson for amateur investors in share market 

Few tips I gained from over 12 years of experience in share market is briefed here. I started with the IPO of Canara Bank. It gave me good returns. So. as an anxious overconfident young investor, I started my explorations for treasure with online trading. But, many years later I found, I never made anything over the bank interest rate, if I had made an equivalent Fixed Deposit in the bank.

Ø What are the major reasons for incurring losses from share market?

1. Buy is not planned. Price of the scrip at the time of BUY , hence will be mostly at maximum.
2. After a reasonable growth, investors are reluctant to sell the holdings.
3. Investments on poor or under performing firms.

My Explanations:

Entry into market must be planned after a detailed study and observations or should be based on expert opinion. Never invest your cash entirely over single scrip. Divide your money among different scrip’s covering diverse fields. When market falls, never get panic. Try to use them as opportunities for accumulating shares if the current market price (CMP) of scrip’s in hand falls below 50%, otherwise just leave it from your mind. Just remember that prices can recover up to 20% in a day.

Ø      What are the strategies for earning good returns from the share market?

1. Prefer Long terms investments. They are safer.
2. Invest, only when the market prices are low. Never buy when prices are at all time high.
3. Never invest more than one-third of your of earning into share market.
4. After a reasonable growth (say, >100%), at least partially book profits.

My Explanations:

Based on my experience, I strongly recommend that never make all your investments into one field alone. One must divide his earnings wisely into three and may deposit as; one-third in bank as fixed deposits, another one-third in share market and the remaining on intangible commodities as gold or land.