The ongoing pandemic has influenced a lot of people to begin investing in the stock market. Are you wondering how to make money in the share market? If yes, then this blog is the answer to all your queries. The returns offered by the share market are much more than what you get in bonds or bank accounts. But taking the right decisions at the right time is essential to gain profits. This is because many people invest in the stock market but hardly make money due to unawareness.
Why Do Some Investors Fail to Make Money in the Stock Market?
This is a harsh truth that the stock market is the only place where there are big sales and the people fear buying. Want to know how to make money in the share market? But first, let’s find out why some investors fail to make money in the stock market.
- When investors wait until the stock is completely safe for investing
If you come under this category, then you are up for the losses. This excuse usually comes up when the stocks are showing bearish trends i.e. they are on a decline. Let’s say that the stock is declining for a few days and you are waiting for the turbulence to pass as you feel the prices will keep dropping.
So basically, you are waiting for the prices to go up and show a bullish trend so that you can buy this safe stock. This means that you are avoiding short-term losses and long-term gains due to playing safe. If you think about it, you are waiting for the prices to go up which means that you will eventually have to pay more for the same stock.
- When Investors say that they will buy the stock when the price goes down
This is the most common excuse used by investors. But this isn’t a good mindset as no one can predict how the price of a stock will move.
- When investors get bored of their existing portfolio and decide to sell shares
Holding stocks requires a lot of patience and there will be days when you feel like selling off your shares. As a wise investor, it is best to hold onto your stocks and wait for the compound interest to show its magic.
Best Tips for Beginners to Make Money with Stocks
With the ongoing pandemic situation, every new investor is curious about how to make money in the share market. If you fall under the same category, you must be aware of the best tips for beginners to make money with stocks.
- Decide what type of trader you are
There are mainly 2 types of traders in the market. One follows the fundamental method of investing and the other follows the speculation method. Both have different ways of approaching the market. The fundamental method gives less importance to the prices of the stock which isn’t the case with the speculation.
- Get rid of herd mentality or following the crowd
If you are keen on learning how to make money in the stock market, you should not buy stocks based on the opinion of others. Following a herd mentality may rip you off your savings which is the biggest fear of any investor. Only you can decide the best stock for your portfolio by carrying out a detailed research and thorough analysis. This is way more beneficial than blindly following the suggestions of other investors.
- Do not confuse emotions with judgment
Sometimes, you are emotionally attached to a particular stock and you wish to hold on to it even though you know it could go downhill. In such cases, it is important to let go of emotions and take a practical approach to achieve success.
- Try to set realistic goals
Stocks indeed offer better returns than bonds and bank schemes, but that doesn’t mean that you start setting unrealistic goals to succeed in the market. Do your homework and read about the company in detail. Note down the risk factors associated with the stock and everything else that may impact the performance of the stock.
- Be aware of your risk appetite
It is a known fact that one may lose money in the stock market given its volatile nature. This means that along with the benefits and profits, you may end up losing your hard-earned money. Thus, as a smart investor, you must know your risk appetite i.e. how much are you willing to lose when you invest in stocks. If you do this, small bumps won’t affect your ride in the share market.
The above checklist will solve your query – how to make money in the share market? You must do your research before you get started and avoid following the crowd to save your hard-earned money. The key to success in the stock market is to make the right decision at the right time and with the required information about the domain.