how to invest in share market, if you want to earn good profit in share market then just avoid 10 mistakes – top 10 expert tips for investment in share market
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1. Picking the wrong stocks
The first mistake is that we are not able to choose the right stocks. Especially pay attention to this if you are investing for a long time. To avoid this mistake, we should check the record of 5 years of a company. Information about the company can be obtained by visiting websites like screener.in, nseguide.com, equitymaster.com, bigpaisa.com. Some special things should be taken care of. First of all see what is the company’s Return on Capital Employed (ROCE), Compound Annual Growth Rate (CAGR), Price to Earning Ratio (PER). ROCE rate is good above 15%. CAGR is the annual growth rate of the company which is above 10%. Similarly, if the PE ratio is less than 20% then it can be said to be okay. The PE ratio is low because it shows how many times the company’s share earnings are worth in the stock market. The less it is, the better. For example, talking about Andhra Paper Company, its PE ratio is only 5% which is very good, ROCE is 18% which is also good, CAGR is 9% which is little less. What is the growth in the company and what is going to be done in the future, it should also be kept in mind. Apart from this, also see the economic moat of the company. This is the special thing that makes the company different from other companies like its location, technology, hold in raw material, long agreement with the customer etc. All these make the company a good investment. Economic Mot can be understood from the company’s website, annual report, investor presentation.
2. Non booking of profit
If we have made a good profit in a stock, then we do not sell it and think that it can increase further. While reducing the desire for profit, we should understand that some shares should be sold at every step. Suppose, we have 1000 shares of a company which we bought at Rs.20 and which have now increased to Rs.24. In this case, we should sell 300 shares out of it and even if it goes to 28, we should sell 300 shares out of it. This means that the costing of our remaining shares should come down drastically. In this way our risk goes on decreasing. If we do not sell according to the risk, then we can never make profit. Often we don’t sell even at 28 and when it reaches 15, we don’t sell. Here we make a mistake whereas in the share market always many companies give shares cheaply.
3. Relying only on social media
Never blindly trust any tip coming on social media for share market. Many experts, groups or channels will be found on YouTube, Twitter, Telegram or WhatsApp who promote wrong stocks. So don’t waste your money without researching the company. For example Cerebra tech. See Zee learn, future lifestyle. Shares of these companies were once the favorite of social media. Now they have drowned the money of 80 percent share holders. Therefore, when you like the stock of a company, do not invest money just because it has been tipped on social media. Study on your behalf and also take the opinion of an expert who is registered with SEBI. Visit sebi.gov.in to check registration.
4. Not placing stop loss
Even if our stock is in an uptrend, we should keep a stop loss (Stop loss is the price at which we sell our stock. This avoids big losses. ). Suppose we bought a share of a company at Rs.50. It has increased to Rs.56 now. Here we should make a stop loss, like now the stock will have to be sold as soon as it falls below Rs.54. If you bought a stock at Rs 50 and it starts falling, you can set a stop loss at Rs 45. Sell as soon as you hit on it. If you do not maintain the stop loss, then you can incur heavy losses. Whereas, long term investors can keep the stop loss up to 25% as their trend can be of at least 1 year.
5. Do not sell if the market is up
When the stock market is up, then selling should be done but we do not sell. At least some profit booking should be done at that time. We should buy when the market falls too much. It should be noted that if you do not sell the entire portfolio, you can sell at least 40%. Most people do the opposite, buying in a bull run and selling fearing a recession.
6. Selling shares in panic
Never sell your shares in panic or by getting caught in rumours. If you have bought shares of a company after thorough investigation, then rely on your study about the company. Try to find out the truth. If ever there is any negative news about the company, then find out for yourself and also take opinion from an expert.
7. Buying falling stocks
Never buy stocks that are falling continuously. For example Yes Bank was at the highest of Rs 800 and when it started falling down, people bought a lot at Rs 200 to 300. Falling badly, it had come down to Rs.10. Similarly, DHFL also came down to Rs.20 by falling below Rs.600. People made a lot of purchases in this too but it ended up being delisted. Srei Infra had gone up to Rs.123, now it has reached below Rs.3 gradually. Reliance Communication, which has gone up to Rs 800 at one point of time, is now listed at around Rs 1.5. Reliance Power’s IPO came at Rs 500 and is now listed at around Rs 12. Always keep distance from falling companies.
8. Taking shares of loss making companies
Money should not be invested in high loan, continuous loss making companies. Look at Vodafone for example. It is a well-known company but is facing heavy losses. There is so much debt on it that it cannot turn profitable soon. Similarly TTML, Alok Industries are in continuous loss. Companies like Jaypee Power, Jaypee Associate, Reliance Capital etc. are also stuck in debt. They are less expected to grow, so avoid such companies.
9. Investing money in the wrong sector
Investing money in wrong sectors like airlines, shipping, cinema companies etc. You will not get much growth in this. The slot booking companies of startups like Zomato, Paytm Policy Bazaar etc. have also caused a lot of loss to the people. There are many such companies because of which we invest money in the wrong sector. Always invest money in good sector. Choose a company that is profit making. Here, airlines do not mean that they cannot invest in airport operators or engineering companies, but should invest in them.
10. Trying to make huge money right away
Never invest money in call option (buying call option of a share i.e. betting on the rise or fall of share price), intraday trading (buying shares in a day and selling them on the same day). The mistake is here that we do this kind of trading in the hope of making huge profits as soon as possible and in that we always suffer losses because we are not experts and we can never earn in the upheaval of the day. . Therefore future option trading without any expert advice should always be avoided. This is pure speculation.
Note: If you want to earn from the share market, prepare a good portfolio with the help of experts, which includes large and medium companies. Include the shares of all the sectors as well. In this way, according to the time, book profit in it.
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