Strategy to invest small amounts Like Rs.5000 or Rs.10000 monthly in the stock market to earn interest more than FD and other conservative funds.
Many investors want to invest small amounts in the stock market, in order to learn about the stock market, So that they can invest higher amounts in the future. For the new investor, a goal of beating FD and PPF Returns Is an achievable goal for the first year. I don’t say that you cannot earn more, but as a new investor, your prime aim should be protecting your capital. if you could protect your capital for one year, believe me, your money will start growing thereon.
My above statement may be demotivating, and you would be thinking that it is better to invest in mutual funds. But the learning you will get by protecting your capital will help you create wealth throughout your life.
Strategy for investment- choose a stock
Being a new investors stick to blue chip companies like Hindustan Unilever, Wipro, TCS, HDFC Bank, ICICI Bank, Dabur, Britannia etc. Blue chip companies are low-risk companies. The return may not be very high, but you will never be at loss. Choose the companies you know very well. All these companies listed above play important role in our daily life. either we are using their products on their services on daily basis.
Strategy of investment- the cost of stock
You may say that Hindustan Unilever is almost trading at Rs. 2500, I will get only two shares of it. Instead I should invest in some stock with current market price of Rs. 100, so I will have at least 50 shares of it.
The number of shares does not matter, what matters is the percentage gain we get on selling them.
Strategy of investment- Time to purchase a stock
Always buy blue chip stocks when they are trading at their 52-week low or are near 200DMA( day moving average).
Strategy of investment- How many stocks should be in the portfolio
Usually a Portfolio should have 20 stocks. This diversifies portfolio and hence absorbs the volatility of the stock market. But if we are investing just for one-year time frame, investing in 3 to 4 stock is enough.
Strategy of investment- If none of the Blue chip stock is at its low
It is very rare that these Blue chip stocks observe dips. They usually trade at high points. Never miss an opportunity to grab these shares at low levels. Since our target is to invest rupees 5000 monthly, then we should have a separate account in which we are saving our money, irrespective of buying or not buying a stock. In 1-year time frame, there would be a time when the stocks will come to their bottle levels, at that time, we can at one go invest 25% of our capital( if we choose to invest in 4 stocks) in one of the stock that is down.
Strategy of investment- When to Sell stocks
Sell the stocks when they are trading at their 52-week high or when they are at lifetime high.
If you use this strategy you will never face losses in the stock market.
Important things to take care of while investing in the stock market
- Invest money that you would not be using for at least 5-7 years, this way you could benefit maximum out of your investment
- Be patient, the market never moves in a linear way, it moves in a zig-zag manner
- Always invest in the best companies, when available at dips
- Always invest regularly, without fail.
Books on Investing
Rich Dad Poor Dad: What the Rich Teach Their Kids About Money That the Poor and Middle Class Do Not!
Learn to Earn: A Beginner’s Guide to the Basics of Investing and Business
One Up On Wall Street: How to Use What You Already Know to Make Money in the Market
The Intelligent Investor
Use the link to open demat account in Zerodha
Also read
- Can you tell me anything to change my mind about quitting the stock market for good?
- How to select stocks for investing in 2022. How to select great companies for investing for beginners.
- Zomato targets to break even by the second quarter of FY24.
- Coal India Ltd, buy or sell
- Market capitalization-Which companies qualify to be in my portfolio?
- Avenue Supermarts Ltd| DMart | A high-growth company with an opportunity to invest
- छोटी-छोटी आदतों से खुद को सुधारें
- Power of subconscious mind. Explanation .आपके अवचेतन मन की शक्ति|व्याख्या हिंदी में| Treasure house within you| आपके अंदर निहित खजाना| Chapter 1
Books recommended
Power of Subconscious Mind by Dr. Joseph Murphy
Disclaimer- All investments and trading in the stock market involved risk. Any decision to place trade in the financial markets, including trading in stock should only be made after thorough research. Trading strategies or related information mentioned in the article is for informational purposes only. Use your due diligence before investing.
