7 Things to Consider Before Investing in the Stock Market

20th Jul '19 by usmanraza

2 comments 960 reads

In modern economies, you might already know the importance of the right investments and how the stock market could be the next big move for your investments. Today I am going to share 7 ways to understand investing and the stock market.

Set Long Term Goals

When it comes to investing in the stock market, you need to set long term goals. This is one of the basic rules for getting rich or profitable. Because if you want to participate in quick rich schemes you probably going to fail.

Understand the Risk

Investment is all about risk. If you cannot afford a loss, investing is not a good fit for you. Risk management has become one of the most important management strategies in business. But successful investors and stock traders take calculated risks.

Invest with Emotional Intelligence

For investments and particularly in the stock market, investors must be emotional intelligence. The fluctuations in stock market demand traders to be emotional intelligence. Otherwise, you going to ruin your life and business both.

Know How to Balance Your Work-Life

Investors in the stock market must keep an eye on stock market moves all the time. You cannot sit 24/7 in front of a laptop or carry a mobile phone in your hand. Stock marketers and traders know this very well. You must develop a work-life balance in order to successfully invest in the stock market.

Choose Small Over Big

Any investment either in the stock market or in real estate etc… should be started with a small budget. Taking a few little steps going to help you understand the ins and outs of the stock market. When you start with fewer funds you play confidently and fear of losing money does not overtake your mind.

Never Invest in A Single Commodity

Always diversify your stock market investments. If you are investing in Gold, invest in the currency as well. Or when you investing in oil, invest in silver or cotton at the same time. Warren Buffet famous saying will help you in justifying this strategy “ Never put all eggs in one basket”.

Do Not Set Your Expectations Too High

Setting your expectations too high in any investment is not good. As explained earlier that investing in the stock market is about managing risk. Calculated risk is not a problem but still, your calculation might be wrong…

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William K

21st Jul '19

I think what Warren Buffett actually said was: 'Put all your eggs in one basket but watch that basket very carefully.'

Carcosa

Just a few comments:

In modern economies... Not sure what you are alluding to here. The London Stock Market existed at the beginning of the 19th century The principles back then apply to today's markets.

Set Long Term Goals; You then go on to contradict yourself (see later)

Understand the Risk
Investment is all about risk... I think it is a lot more than that

Invest with Emotional Intelligence... A nice buzzword but if investing with emotional intelligence then that is doomed to failure. Having the right subset of emotional intelligence traits is, however, necessary. That subset can be characterised as being investment related arrogance.

Know How to Balance Your Work-Life
Investors in the stock market must keep an eye on stock market moves all the time. You cannot sit 24/7 in front of a laptop or carry a mobile phone in your hand. Stock marketers and traders know this very well... This is NOT investing that you are describing. This is playing in the devils den (trading). This also contradicts your "Long Term Goals". 99.9% of retail traders lose money in the long run. As for balancing Work-Life (another modern buzzword) it's all hogwash. Do what makes you happy.

Choose Small Over Big .. In practical terms investors rarely have the wherewithal to invest big in the beginning (assuming you are talking about being a retail investor). The danger with using a small amount of money is achieving major success that bolsters your confidence level so that you make a large investment which subsequently fails. i.e. a false confidence.

Never Invest in A Single Commodity... There is nothing inherently wrong in investing in a single commodity or for that matter a particular sector or individual company if you have an appreciation of "Understand the Risk". Indeed many investors have started out putting all their eggs in one basket.

Do Not Set Your Expectations Too High.. I can agree with this to an extent. It is the timeframe required to meet high expectations which is generally the issue.

Overall I thought your post was lacking in detail, contradictory, misleading and without evidence. Can't take it too seriously when applied to real world private investors. Nonetheless a reasonable starting point if by someone just coming out of school.

7 Things to Consider Before Investing in the Stock Market

Set Long Term Goals

Understand the Risk

Invest with Emotional Intelligence

Know How to Balance Your Work-Life

Choose Small Over Big

Never Invest in A Single Commodity

Do Not Set Your Expectations Too High

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Usmanraza

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