Investing in equities is one of the most popular ways to create wealth in long term. The number of opportunities equities hold for investors cannot be stated in one go. It has an immense number of opportunities apart from just buying and selling stocks.
But to become rich, an investor has to learn how to invest smartly and grow money. Equity investments allow investors to earn returns in the form of capital gains and dividends. Also, one important point to mention here is that 'the sooner you begin, the better off you will be able to cash in the power of compounding'.
According to Arun Singh Tanwar, founder & CEO, Get Together Finance (GTF), having a sound knowledge about equities is the key to innovations of techniques and strategies for a right investing. Though every investor or trader has a different and unique approach, there are some basics that all should know. Having a right strategy to tap the stock market can make an investor or trader stand out.
"One of the key benefits of investing in equities is that it provides investors with long-term goal growth potential. Only analysis pays off," he said. He added that it is quite common in the stock market to get distracted by several factors like external news, rumours and tips.
Let's check out 4 money making tips by investing in stock market:
1. Analysis: An investor or trader should do own analysis before taking action. Arun said that to play safe and smart, it is important that a retail investors to be aware of brokerage charges, customer support, clearing and settlement process etc. Even an iota of an ignorance can cause losses.
2. Roadmap: Arun explained that an investor or trader should always have a roadmap in place. "Having things clear in the head or a strategy before making a move in the market give strength to flow with the market trend handle," he said. Following the trend coupled with a right strategy including target price, stop loss and others help in taking entry and exit at the right point and avoid unnecessary losses.
3. Diversify: There is a famous saying that "don't put all your eggs in one basket". Always have a diverse portfolio. This will help in creating a portfolio that pays.
"Having a diverse portfolio is also one of the risk mitigation strategies. It always helps from sudden crashes," he said.
4. Invest Regularly: Combining investing in equities with smart financial management on a regular basis can help in achieving the financial goal. Discipline and consistency are the most significant predictors of success in any type of investing.