Your Guide To Choosing The Right Investment Strategies in Stock Market

Are you apprehensive about investing in the stock market? It is natural as you’d have heard contradicting stories of people who have made riches investing in stocks and those who have burnt their fingers. On one hand, stock market investing allows you to grow your capital exponentially while on the other it exposes you to great risks if you make the wrong choices. This is where strategy comes into the picture and to earn maximum returns you need to understand and follow the right investment strategies in the stock market. Here in this short write-up let us look at some of the best investment strategies for beginners.

Figure out your goals…
The first and the most important among investment strategies in the stock market is to figure out your goals. What are you investing for? What plans do you have with your investments for the future? From buying your dream car or a townhouse to investing money for your retirement, goals vary with every investor. You can have a mix of short and long term goals and in each of these cases, you will need to adopt different investment approaches. Once you have figured out your goals it becomes easy to choose the right stocks.

Invest your surplus capital…
As a thumb rule, you should only invest your surplus capital in the stock market. This is the money you won’t need to pay your bills or gift yourself a holiday in the near future. Stock markets have their volatilities and investing your emergency funds into the market can force you to sell them at a time when they run at loss. Ideally, you should invest capital that you don’t wish to spend anywhere in the next 2-5 years at the very minimum.

Diversify your investments…
It is often said “don’t put all your eggs in the same basket” and there is perhaps no better proverb for investment strategies for beginners. You should diversify your investments as much as possible. Start investing in different industries as this will help you mitigate the industry-specific risk factor. Next, you must choose a good mix of small-cap, medium cap, and large-cap stocks. While small and medium caps have the potential of growing exponentially, large caps being more stable safeguard you against steep fall in prices. If you have a short investment horizon you should park more capital into large caps and for longer investment timeframe allocate more capital to small and medium caps.

Be Patient…
Every counter goes through its cycle of upswing and downswing and this is where you must be patient. Read the expert opinion on the direction of the market and the stock you have invested in. Selling stocks at marginal profits when it has the potential to rise further is something you should avoid. Also, don’t sit over your losses for too long hoping a stock to rise if experts opine differently. Remember not all your chosen stocks are likely to fetch your profits and you should avoid locking your capital on stocks that are likely to go down or don’t have the potential of upside in the near future.

To sum up, if you follow these Investment strategies in stock market as a beginner you will be able to earn good returns from the market and also create a large corpus for the future.

Summary– In this write-up, we look at some of the reasons why you should be on a day trading platform and how you can earn handsome returns on your investments.

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