Well not everyone is a stock market pro but who would not want to make some extra money by putting some of their money in the stock market and taking control over their investments. So we provide you top 10 things to know about stock market, they can’t guarantee you success but will definitely help your launch in the stock investment arena.
10. Market News is important, but not everything
Don’t change your strategy according to each and every market news. You should take interest in the everyday market headlines, but choose carefully what to apply since market headlines change every day and they can’t explain everything.
9.Buy cheap and Sell Profitably
This may sound easy but once we invest in shares of a particular company we don’t want the prices to go down. But stock market is an unpredictable business and things can go downhill and uphill any time. However, it has been seen that if you invest in good stocks and invest for a long time, chances of getting profit becomes higher as compared to selling them fast.
8. Indians wary of stock market
India with a 1.2 billion population has only 20 million demat accounts (A demat account is necessary for Indian citizens to trade in stocks). Indians are wary of equity and data from 2010-11 shows only 1.2% Indian household savings invested in shares which comes out to be 2.5 billion dollars for a highly populated country.
7. Market is unpredictable at its best
The stock market is affected by political policies, economic conditions and unrelated worldwide happenings. The factors affecting the market at any point is immense and complex. Even when the things seem hunky dory for a company, its share price may drop. Investor should be aware of the risks.
6. The BSE and NSE
These are the two main stock exchanges: Bombay stock exchange(BSE) and National stock exchange(NSE) for equity trading in India.
BSE is the oldest stock exchange in Asia and claims to have the largest profile of listed companies. However out of 8900 stocks listed, only 3000 traded every day.
5. There is no perfect success formula
Professional as well as newbie investors have some parameters like price earnings ratios, dividends and profit margins to judge the value of a stock. However, but there is no single parameter that can tell you a good stock from a bad stock. A stock that looks cheap can rise five fold and a flashy startup stock may dip down.so long term investment can be a good choice.
4.Tax can play a spoilsport
It is known that profit on equity shares sold on stock exchanges in India held for less than 12 months are taxed at a flat rate of 15 percent. For e.g. if you invested in FANG (Facebook, Amazon, Netflix and google) stocks and gained returns in the range of 34-134% in 2015, market gurus would not advise to sell your stocks within a year since capital gain tax will ruin your profits.
3.Get acquainted with Filings
How to find the good companies to invest in? Well some investors have a sixth sense but if you are new to this, you need to do your homework. Public companies make filings every financial year with the ministry of corporate affairs in which Balance Sheet of the Company, Profit & Loss Account, Compliance Certificate, Registered Office Address, Register of Member, Shares and Debentures details, Debt details etc. are provided.so these regulatory filings will get you closer to the companies you want to invest in.
2.Know your dividends
Dividend is the fixed amount allocated per share that the company pays to their investors which is a part of the company’s profit. Dividend associated stocks are not foolproof but they do provide a blanket that others don’t. Caution: Too good to be real dividends don’t last for long. However, if you are a long term investor buying shares with dividends can provide you good profit.
1. Price tag isn’t everything
The price of a single share shouldn’t be the deciding factor for whether the stock is profitable or not. For e.g. A single Rs.5000 share is not always less profitable than 10(Rs.500) shares and shouldn’t be the deciding factor. Buying on the basis of cheap price tag isn’t always a good strategy.
We hope you find this article informative and helpful. Here we listed top 10 things you should know about stock Market. Stock Market is a complex and profound topic so you can’t expectto be a master in a day but discipline and perseverance can take you a long way.